L&M gets serious about NZ CSM Neil Ritchie, New Zealand Friday, 23 May 2008
NEW Zealand explorer L&M Petroleum is embarking on a possible $NZ2 million ($A1.62 million) program aimed at evaluating what it believes are extensive coal seam methane resources in its South Island exploration permits.
The NZX and ASX-listed junior said yesterday that its initial review of the CSM potential of its onshore Western Southland Basin permits had identified three potential CSM fairways – Takitimu North, Takitimu South and Longwood.
Eocene-aged Beaumont coals, believed to be highly prospective for economic CSM reserves, are present in the fairways that extend for about 85km within the company’s PEP 38226 (Waiau), PEP 38230 (Te Anau) and PEP 38238 (Blackmount) permits, the company said.
L&M said the review indicated total estimated mean potential CSM resources of up to 300 billion cubic feet.
Company chief executive John Bay said L&M would next month start an aggressive exploration program.
The initial focus of the program would be the Takitimu South fairway (in northeast PEP 38226), the southern end of which was next to the Ohai coal field, where both Eocene-aged Beaumont coals and older Cretaceous-aged Morley coals had been found previously.
Over 40 core holes drilled previously within the Ohai area had tested gas, with desorption testing showing Morley coals in this area contained up to 10 cubic metres of CSM per tonne of coal, Bay said.
The program, which should cost up to $NZ2 million ($A1.62 million) would include drilling three CSM wells in PEP 38226, acquiring 15km of new 2D seismic in each of the three permits to confirm additional targets, and drilling up to five additional targets, depending on the outcome of seismic analysis.
Bay said New Zealand’s CSM potential was largely unrecognised and the country’s gas prices were significantly higher than eastern Australian levels.
“We believe our CSM exploration program has the potential to deliver sizeable gas reserves, with a relatively low level of exploration risk and we will be aggressively pursuing this opportunity,” he said.
“We have already had expressions of interest from significant parties who are prepared to purchase gas from any future production.”
The company was able to finance the CSM work program out of current funds, according to Bay, who said the permits also contained conventional petroleum targets.
“In most of New Zealand, you either get coal seam gas permits, as in Waikato, or conventional petroleum plays, such as in Taranaki,” Bay told PetroleumNews.net from Wellington.
“It’s unusual that you get both, but that’s what we’ve got in Southland.”
Bay said L&M was not abandoning conventional petroleum plays and would continue to be active on that front, such as with the just granted second West Coast exploration licence, PEP 50558, to the southeast and south of PEP 38521 where L&M drilled the sub-economic Fireball Creek-1 wildcat well earlier this year.
“But coal seam gas adds another dimension,” he said. “We are encouraged by the work done so far and are pretty excited about the possibilities.”
L&M shares spiked on the news of the CSM study, closing yesterday on the ASX at A18c, up from A10c, and at NZ24c, up from NZ12c, on the NZX
LMP Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
