August 6, 2008

Exploratory Wells Will Probe Size of Coal-Seam Gasfield

By LAW, Tina

The first phase of explorations to determine the extent of coal- seam gas in Southland is about to begin with the drilling of three wells.

L&M Petroleum managing director John Bay said yesterday the company was hoping to find more than 300 petajoules of coal-seam gas or about 300 billion cubic feet at its Western Southland Basin permit site. It was a similar size to the Kupe gasfield in Taranaki.

The drilling of the first well, Goodwin-1 next to the Ohai coalfield, would begin within the next 10 days and it was expected to take a week to reach a depth of 250 metres.

Once all three wells had been drilled, the cores would be analysed to determine the coal's properties, gas content and gas desorption levels.

Bay said 17.2km of new two- dimensional seismic data would also be acquired over the western end of the Ohai coalfield area and would be used to confirm the location of other possible wells. The entire exploration programme was expected to cost up to $2m.

Coal-seam gas was a natural by-product during coalification, but was not yet commercially produced in New Zealand.

Bay said if everything went well it could take three to five years before any gas was extracted for commercial use.

The gas would be used within the South Island, probably for power generation or as compressed natural gas.

L&M's shares yesterday closed up 2.8%, or 0.5c, to 18.5c.

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