Comet Ridge applauds increasing flows at Mahalo coal seam gas project

Comet Ridge (ASX: COI) has announced gas production from a pilot well at its Mahalo coal seam gas (CSG) project in Queensland has reached 1 million cubic feet per day and continues to climb.

Gas has been flowing from the Mira 6/2 horizontal-vertical combination well since December last year. Output has followed a strong upward trend, with the company cheering an 840,000 cubic feet per day flow rate two weeks ago.

Comet Ridge managing director Tor McCaul said the new flow rate was a significant milestone for both the company and the Mahalo block.

Mira 6/2, along with three vertical wells, is actively dewatering the Mira pilot scheme at the Mahalo project.

Comet Ridge reported that although water rates in the field were already dropping from their peak values, this was consistent with the performance previously seen at the Mahalo pilot scheme, located 12km to the northwest.

The Mahalo project

The Mahalo project is located about 240km west of Gladstone in Queensland’s southern Bowen Basin.

It contains two pilot schemes, Mahalo and Mira, which were commissioned in 2013 and operate concurrently.

The project is close to infrastructure, with pipeline connections to the Gladstone domestic and liquified natural gas market being a short distance to both the south and west of the two pilot schemes.

Comet Ridge holds the majority stake in the project at 40%, with larger gas players Santos and Origin Energy (through its subsidiary Australia Pacific LNG) each holding 30% interests.

At the start of the month, Comet Ridge announced a massive 473% upgrade to the Mahalo project’s 2P (proven plus probable) CSG reserves, from 30 petajoules to 172 petajoules.

This reserves position makes it one of the largest undeveloped gas projects on Australia’s east coast.

“As the Mahalo project moves closer towards a development decision, additional focus will be placed within the 2018 work program on building 1P and 2P reserves as further production data is collected and additional appraisal is undertaken,” McCaul said at the time.

Other projects

Comet Ridge also holds 100% interests in two exploration permits and 20% in a third permit located in Queensland’s Galilee Basin.

The Gunn project area, situated in one of Comet Ridge’s 100%-owned blocks, has been estimated to contain a prospective gas resource of 597 petajoules.

The company is planning a drilling program in May on the Albany structure, located north of the Gunn area in the same permit. CSG pilot drilling is also planned to commence in the second half of 2018.

In addition, the company holds stakes in three exploration licences covering 18,190sq km in the Gunnedah Basin in northern New South Wales.

These permits have separate CSG and conventional oil and gas interests, with Comet Ridge’s CSG stakes ranging from 22.5%-60%, and its conventional interests being between 97.5-100%.

Comet Ridge is the operator of the conventional interests. Santos is the CSG operator and holds the remaining CSG interests alongside energy retailer EnergyAustralia.

The three NSW permits have a total net recoverable prospective gas resource of 2101 petajoules.