Blue Energy identifies potential to increase Sapphire gas flow rates

Gas developer Blue Energy (ASX: BLU) believes it may have identified the cause of worse-than-expected results from its ongoing Sapphire 5/6 pilot drilling and testing program.

An independent review of the Sapphire Pilot lateral well drilling operations has identified a component of the drilling fluid program that appears to have damaged the coal interface during the drilling process.

The company believes this has impacted the ability of the gas-saturated coals to flow at their optimal rate.

Potential cause

The study identified the viscosifier used as an initial response to the stuck-in-hole issues experienced on Sapphire 5L2 well as a potential cause of the testing issues.

The viscosifier – often used as an additive to drilling fluid to assist in hole cleaning at certain times in the drilling process – has been found to have had a deleterious effect on the gas productivity in Permian-aged coals in other locations in the Bowen Basin, where Sapphire is located.

The Blue Energy board is now assessing the recommendations identified in the review, including a low-cost re-drill (twinning) of one of the existing lateral wells to target a single coal seam using a dedicated specific drilling fluid program with no additives.

Sub-optimal rates

The review was initiated to investigate the potential causes of the sub-optimal gas rates at Sapphire 5/6 and formulate options to best optimise the gas flow in the area of the Sapphire Block.

The Sapphire Pilot testing program, located in Sapphire Block ATP 814, remains operational and the pilot wells continue to flow gas.

However, while the current rate of gas being flowed is 129,000 cubic feet per day (mscfd) and steadily continues to increase, the numbers are considerably below results in other nearby pilot programs.

It is reported that the average well rate of the adjacent Moranbah gas project gas wells is 200,000mscfd.

Dewatering to continue

The review also assessed Sapphire pilot data suggesting the lowest seams in both Sapphire pilot sets have still not been depressurised sufficiently (through continuous dewatering) to promote effective gas desorption, as the water levels remain above these seams.

Blue believes ongoing dewatering operation in these seams will lower the water levels, to promote desorption, in the next month.

Important opportunity

Blue Energy is confident that Sapphire can become an important supplier to the energy-hungry east coast.

The Sapphire project in the North Bowen Basin is a proposed 117-well development of up to 240 petajoules (PJ) of sale-spec gas.

The company has already signed a number of memoranda of understanding for gas supply with a range of offtakers for the supply of up to 600PJ to Wallumbilla over ten years.