I wrote an email to Blue Energy Management about my concerns...

I wrote an email to Blue Energy Management about my concerns regarding news flow being very slow from the Pilot program. I received an Email back from John Phillips today, I'm sure he won't mind me posting his reply here...

Thanks for your email � apologies for the slow response.

The pilot wells drilled last year have been completed (3 out of the 4 wells � Monslatt 6 is currently inaccessible still) and are currently being production tested. The issue has been the active wet season in the Mackay/Nebo region this year � starting in November last year. Whilst we drilled the wells last year, we attempted to flow test the wells upon initial drilling in open hole and underbalanced � with the best result being about 15,000 scf/day. We elected to try some form of enhancement on two of the wells, together with a surface � inseam well (Monslatt 8H) penetrating Monslatt 7. The enhancement we attempted on Monslatt 5 and 4 was the small diameter tight radius lateral trial � which puts in several short 2 � diameter laterals from the vertical well bore. Obtaining this equipment and performing this trial was delayed due to weather and availability of suitable rigs. This was finally completed in mid January, after significant delays due to rain and cyclones. Completion of that well (running tubing, pumps and surface equipment) was not completed until mid February � for similar reasons. In essence the delays in getting the well work done have been significant.



Access to our Monslatt well sites requires traversing several significant creeks, which in prior wet seasons (as well as the usual dry seasons) has not been an issue. However, this year it has been an exceptionally wet, wet season and these creeks have been constantly in flood either by direct rainfall in the catchment or by the flooded coal mines upstream, pumping out flood waters into these creeks and causing them to flood. In flood, these creeks are impassable � up to 6m deep. It can take up to a week for creek levels to subside. We do not have any permanent camp facilities at the wells sites and there are no all weather roads or bridges over these creeks that give us all weather access.

We require access to truck the produced water out of the wells to an existing treatment facility � should we allow the wells to continue pumping when the roads are cut by floods, we are at risk of allowing the onsite water storage to overflow and in so doing breach our environmental obligations. Thus we must shut in the wells to avoid water storage overflow. This is a particularly frustrating position. We do not yet have enough data to be able to size a more permanent water storage facility. (The regulatory approval process for construction of dams for CSG water storage is not trivial and can take an inordinate amount of time � we opted to use portable storage to get initial water quality and flow rate data before embarking on a significant dam construction process). As a result of these access issues, our production testing has been punctuated during this wet season. We also want to bring the wells on �gently� to avoid any fines migration/damage to these coals.