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Galilee Energy Ltd releases interim financial report

World Coal,

The Australian coalbed methane (CBM) energy company, Galilee Energy, stated its intention to develop CBM fields in Australia as it released an interim financial report for H1 of 2013/14.

The company is currently exploring for CBM in the Galilee Basin. Located in central Queensland and covering almost 250 000 km2, the area is one of the largest remaining frontier basins in Australia with significant potential for CBM.

Favourable coal geology

The company said that Queensland was highly prospective for CBM due to a combination of favourable geology and extensive coal resources. Coal seams in the region are thick and multiple seams are present in many basins, with vast resources shallower than 1000 m.

Company strategy

In its report, Galilee Energy said that it would continue to pursue its strategy to develop its Galilee CBM project into a commercial gas field and to grow the company through hydrocarbon exploration and development opportunities.

Galilee holds a prospective CBM and hydrocarbon tenement in the Galilee Basin through its subsidiary, Galilee Resources Ltd. Tenement ATP 529P covers approximately 4000 km2, and is located approximately 80 km northwest of the Barcaldine gas-fired power plant.

ATP 529P is held in a 50/50 joint venture with AGL Energy Ltd, under which AGL is the operator. ATP 799P, which was wholly owned and operated by Galilee, was relinquished during H1.

Results from operations

The loss for continuing operations after tax for H1 was AU$ 2.5 million.  In 2012, the loss stood at AU$ 4.2 million. This reduction was largely due to the lower expenditure at the Galilee CBM project due to less workovers on equipment.

During H1, AGL and Galilee operated the Glenaras 5-spot pilot project. A detailed review of the operations resulted in a series of recommendations related to the restart and operation of the pilot project. Implementation of the recommendations began in November 2012.

Since the remediation programme was completed in March 2013, all five wells have performed as expected and have delivered stable operations with production from all wells, Galilee noted in its report. At the end of Q2, all pumps were working to design and average total water flow rate was around 3000 bbl/day. However, the failure of GA04 delayed the likely timing of any significant gas production from the pilot.

Ongoing activities

In March 2014, Galilee announced the completion of its detailed review of the Glenaras pilot project.

The review included a comprehensive geological and engineering assessment of all the available technical data from both the Glenaras and Rodney Creek pilots, along with information from exploration wells and seismic data collected across ATP 529P.

In summary, the review:

  • Confirms the potential of the late Permian Betts Creek coal beds over a large area of ATP 529P. The quality of resource, including coal thickness, permeability and gas content, has the potential to support commercial gas production.
  • Determined that the well completion design used for the Glenaras Pilot and the previous Rodney Creek pilot, particularly the application of fracture stimulation, is not appropriate for this geological setting. The current design is unlikely to result in sufficient pressure drawdown of the coals in a timely manner, as a result of water influx from other zones within the Betts Creek coal section. This lack of pressure drawdown in the coals is the reason for the minimal gas production seen in this area to date.

As a result of the review, and in consultation with AGL, the joint venture has agreed to cease operation of the Glenaras pilot in its current form.

Galilee has proposed a modest recompletion programme, which will use the existing wells at the Glenaras site, as well as current infrastructure, and move ahead with an alternate completion design. The company said that this programme has the best chance of delivering a significant drawdown of the coal using existing infrastructure and therefore provides a true test of the gas production potential of this project. 

Edited from various sources by Sam Dodson

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