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Galilee Energy looks for growth opportunities in CBM market

World Coal,

Galilee Energy has released its quarterly report on the company’s earnings and updates for its coalbed methane (CBM) pilot project, which is being developed with AGL Energy.

In late February 2014, the company completed a detailed review of the Glenaras Pilot (ATP 529P) CBM 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 prospectivity of the late Permian Betts Creek coal beds over a large area of ATP 529P. The quality of this resource, including the coal thickness, permeability and gas content, has the potential to support commercial gas production.
  • Determined that the well completion design utilised for the current Glenaras Pilot and the previous Rodney Creek Pilot, particularly the application of fracture stimulation, is not appropriate for this geological setting.
  • Concluded that 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 beds. This lack of pressure drawdown in the coals is the reason for the minimal gas production to date.

As a result of the review, and in consultation with AGL, the Operator of ATP 529P, the Joint Venture agreed to cease operation of the Glenaras Pilot in its current form. The pilot ceased pumping operations on 3 March 2014.

Galilee has proposed a new strategy to recomplete and restart operations at the Glenaras project.

The company proposed a modest recompletion programme utilising the existing Glenaras Pilot wells and infrastructure and an alternate completion design.

Galilee believes this programme has the best chance of delivering a significant drawdown of the coal utilising existing infrastructure and therefore provides a true test of the gas production potential of this project.

Following consultations with AGL, the Operator of ATP529P, the Joint Venture is now in agreement to proceed with a modest workover programme to test the alternate completion strategy. The programme will involve isolating the existing open completions and perforate and test the uppermost R1 coal within the Betts Creek Formation. Pumps will then be re-run and the wells put back on production test. This completion design will provide drawdown on the coal only, and not the permeable sandstones within the Betts Creek Formation, allowing a definitive test of the gas production potential of this project.

The expected of the cost of the programme is less than AU$ 2 million.

The joint venture is currently finalising design parameters for the programme and expects to begin redevelopment within three months time.


At the end of Q1 2014 the company had cash of AU$ 25.1 million and no debt. Cash will grow to approximately AU$ 26.8 million after receipt of an R&D cash rebate of AU$ 1.7million – cash would represent approximately AU$ 0.17/share.

Company strategy

Galilee said that it would continue to search for growth opportunities within the CBM industry.

In order to do so, the board has approved a new three part strategy:

  1. Maximise the value of current assets – demonstrate commercial CBM flow and book reserves.
  2. Develop a sustainable foundation by building a solid production base. Deliver value and upside with technical expertise.
  3. Grow the exploration portfolio by acquiring low-cost, early-stage positions in underexplored areas.

The company said that it was “well advanced in implementing the growth elements of its strategy and hopes to be able to announce the first project shortly.

Adapted from press release by Sam Dodson

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