Pure coal-seam gas explorer Strike Energy (ASX: STX) is one step closer to drilling its Jaws-1 appraisal well in the Southern Cooper Basin Gas Project in Southern Australia.
Strike has announced it has signed a Memorandum of Understanding (MoU) to grant to Halliburton the right of first refusal to provide integrated drilling, completion and stimulation services for the first 50 wells to be executed as part of the proposed Phase-1 development of the Southern Cooper Basin Gas Project in PEL 96.
“Strike and Halliburton have already forged a strong relationship and I am excited about the prospect of delivering more wells together. The incentivisation of Halliburton to deliver Jaws-1 to a quality that is synonymous with the Halliburton brand will further our strategic relationship to ensure the aspired cost reductions and improved well delivery times are achieved much earlier in the Phase-1 project development,” said Stuart Nicholls, Managing Director at Strike.
According to Strike, the first refusal condition is contingent on Halliburton successfully delivering the Jaws-1 appraisal well and declaring commercial success on the project with regards to the Klebb area within PEL96.
Halliburton and Ensign contracted to drill
Drilling at the Jaws-1 appraisal well is currently set for 14 February.
“The Jaws-1 well is an exciting project that plays to our strength in collaborating and engineering solutions to maximise asset value for our customers.
We are pleased to agree to terms where both parties are looking at continuing our collaborative relationship, and Halliburton is confident we will execute successfully against our key performance criteria and deliver superior service quality for Strike,” said Sid Whyte, Halliburton Regional Vice President in the Asia Pacific.
With the involvement of Halliburton and Ensign, Strike is now well-equipped to undertake work on a very large, onshore gas appraisal and development project in the Southern Cooper Basin.
Strike holds a 66.6% interest in PEL96 while Australian Gasfields Limited (ASX: AGL), a subsidiary of Energy World Corporation (ASX: EWC), owns the remaining 33.3%
Building up for a strike on pure coal-seam gas
Strike Energy first discovered the “regionally continues and unusually thick gas-bearing coal seam” at a depth of 1,900 metres, making the upcoming Jaws-1 spud as one of the deepest coal seam appraisal wells ever drilled.
Drilling has identified an estimated net 2C resource of 103 billion cubic feet of gas (bcf) and a prospective resource with seismic support, estimated at over 11 trillion cubic feet of gas (Tcf).
Later this month, Strike will initiate its Jaws-1 appraisal work involving an 800-metre horizontal section with first gas flow expected towards the end of the year.
Coal-seam gas has typically been produced from coal seams at depths of between 300 and 1,000 metres from eastern Australian sedimentary basins. More recently, improved drilling and well completion techniques have extended commercial production to depths beyond 2,000 metres where high gas content and favourable fracture permeability combine for large tonnage potential and strong operating margins.
Strike has said that success at Jaws-1 would support immediate work on a Jaws-2 well, aiming for a 1,000-metre horizontal section and nine stimulation stages.
If Strike is successful in its intentions to drill a multi-horizontal well, the company hopes to target more than 7 petajoules (PJ) of gas (around 6.6 trillion cubic feet) from horizontal sections in three coal seams. Strike estimates suggest this will cost approximately $13 million which would help drive initial capital costs down to $1.75/ per gigajoule.
Strike is also confident of implementing further cost efficiencies of up to 40% as part of production-stage drilling programme.