Galilee Energy (ASX: GLL) has announced the production of first gas from a pilot program at its Glenaras coal seam gas (CSG) project in Queensland’s Galilee Basin.
The multi-lateral pilot program was brought online for continuous production in June. It involves the production testing of two lateral wells, Glenaras 10L and Glenaras 12L, plus a third monitoring well, Glenaras 11L.
The gas developer today reported that the casing pressure has built up in its two test wells, indicating that gas is beginning to be produced from the coal.
Glenaras 10L is currently being redirected through a separator and has started producing gas. Glenaras 12L is also expected to be redirected through a separator in the coming weeks.
According to Galilee, the gas being produced from Glenaras 10L is “too small to measure” at this stage. However, gas rates are expected to increase as fluid levels in the wells are reduced further and more coal area is drawn down below the critical desorption pressure.
Last week, the company reported excellent water rates and the identification of a direct communication between the two test wells, which was enhancing pressure drawdown in the pilot area.
In today’s announcement, Galilee reported increased water rates to about 3500 barrels of water per day, although these rates are now levelling off as gas production commences.
“The results so far are excellent and to see the pilot commencing first gas production is a great step forward,” Galilee managing director Peter Lansom said.
He said it would still take a few more weeks to achieve full drawdown of the coal and some months to drawdown an area sufficient to achieve the company’s targeted first commercial gas rates.
“So far the coal and pilot are performing above expectation and we look forward to the coming weeks as gas production ramps up,” Lansom said.
The Glenaras project has been estimated to hold a 3C (proven, probable and possible) contingent resource of 5314 petajoules of gas.
Galilee is aiming to convert a large portion of these resources into reserves.
Galilee shares were sitting 1.41% higher at A$0.72 by midday trade.