L&M to drill for gas in Ohai this month By EVAN HARDING - The Southland Times | Wednesday, 16 July 2008
Exploration company L&M Petroleum expects to start drilling for coal seam gas in the Ohai area by the end of this month, its chief executive John Bay said.
Coal seam gas is found in underground coal beds.
"It is almost pure methane and has all the uses of normal natural gas, Mr Bay said.
He said he was very confident coal was in the drilling area as it was known to be nearby.
"The question isn't so much whether the coal is there but whether the quantities of gas are sufficient to be commercial and that's what the testing will tell," he said.
The company would initially drill three test wells plus acquire some seismic data in the area. Results of the test wells should be available about October, Mr Bay said.
A minimum of 10 petajoules, equal to about 10 billion cubic feet, of coal seam gas would need to be found to justify moving in the equipment to produce the gas, he said.
"We are optimistic the field could hold up to 300 (billion cubic feet) if everything can go well." The company's venture into coal seam gas exploration comes after it has already spent millions of dollars unsuccessfully hunting for oil and conventional gas in the Waiau Basin.
"This isn't a change of direction, it's just another project on the list ... the conventional programme is still ongoing," Mr Bay said.
The company was still looking for partners to drill for oil near Te Anau, as its preference was to "share the risk" , he said.
The cost of drilling a well in the search for oil in the Te Anau Basin would be about $5-6 million, he said in April.
The company also still planned to drill the Otahu well in the Waiau Basin later this year or early next year, he said.
L&M Petroleum, which is listed on the stock exchange, still had about $10 million in the bank, he said.
So we are looking at October before we know if they have been successful in locating economic CSG quantities.
Regards
Kojasper
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