Since spudding its Tamarama-3 well in within its Windorah gas project in Queensland, Real Energy (ASX: RLE) has been keeping both shareholders and industry analysts updated on a weekly basis.
In its latest update, Real Energy said that Tamarama-3 had reached a depth of 2,488 metres MDRT of a targeted 2,600 metre total, with current operations now paused in order to carry out a drill bit change.
Tamarama-3 well is the second well of Real Energy’s two-well gas appraisal program designed to prove commercial gas flow. If the wells are successful, the oil and gas junior hopes to establish pilot production from both wells.
One potential outcome will be to connect flow lines so that the produced gas is supplied into Australia’s east coast gas market.
The market remains incredibly tight with gas consumers stuck with high prices and limited sources of competing supply, according to the Australian Competition and Consumer Commission (ACCC).
In a report published in February this year, the ACCC said that the east coast gas market is “at a crossroads” with the “only real choice being to address the fundamental supply problem”, particularly in the south.
Real Energy stepping in
Real Energy said it that it has recorded “elevated gas readings” over the Nappamerri and Toolachee formations respectively.
Also, the company said that highly elevated gas readings have been recorded in the Patchawarra formation penetrated so far with several gas peaks over the numerous sandstone intervals.
Real Energy said that its recent results validate its ongoing work and raise hopes of the Tamarama-3 well being completed successfully.
The significance of these gas shows in the Patchawarra formation will be further evaluated by electric logs to be undertaken after reaching the total depth, currently predicted at approximately 2,600 metres MDRT.
“The results so far are very positive and consistent with our pre-drilled predictions for Tamarama-3. There is a bit to go, as we are still drilling and will be running electric logs to evaluate the significance of the gas shows seen in the well,” said Mr Scott Brown, managing director of Real Energy.
With more than 2,400 metres of drilling now completed, from a targeted 2,600 metres in total, Real Energy is effectively on the finishing line of Tamarama-3 and on the verge of potentially becoming a supplier of highly-sought after gas in eastern Australia where wholesale gas prices remain generally higher than the Asian LNG spot netback prices.
According to the ICCC, one of the causal factors behind the demand/supply imbalance is that the Gippsland Basin Joint Venture (GBJV) legacy fields, the biggest offshore producer in south-east Australia, are reaching the end of their life after over 45 years of operation.