Strike Energy has started pilot testing to confirm the commercial quality of the Jaws-1 deep coal seam gas reservoir at its Southern Cooper Basin Project in South Australia after finalising commissioning activities. The electric submersible pumps will be run at low rates to ensure they are in good working order before being ramped up based on the productivity of the stimulated reservoir.
ASX listed Strike Energy will soon be able to gauge the commercial quality of its Jaws-1 deep coal seam gas project in South Australia’s Cooper Basin after commencing pilot testing of the wells.
In a market update recently, the company said that it had established reservoir water flows to surface and started depressurisation of the project.
Strike will run the electric submersible pumps at low rates for several days to ensure that the pumps and other systems are in good working order.
It will then ramp up the pumps based on the productivity of the stimulated reservoir.
Strike has also completed a $3m share placement at a 5% premium to its last closing price on 3 August 2018 to support the Jaws-1 testing program and to order long lead items for its West Erregulla-2 well in the Perth Basin in W.A.
Last month, the company said technical data from the well such as side-wall pressure coring and wireline logging had indicated that the Jaws reservoir is potentially capable of producing flow rates of natural gas to surface sufficient to underpin the booking of a reserve.
The deep, horizontal well at Strike’s 66.67%-owned Southern Cooper Basin Project is designed to develop gas flows from what would be Australia’s deepest commercial coal seam gas deposit.
If successful, Strike could potentially unlock a massive 11 TCF of gas from the wider Southern Cooper Basin project.
Managing Director Stuart Nicholls said: “It is a very exciting time at Strike as we progress towards our major objective of assessing the commercial quality of the coals at the Southern Cooper Basin Gas Project.”
The Cooper Basin is Australia’s largest onshore oil and gas province with annual production in 2016-2017 of 82.24 billion cubic feet of gas and 11.25 million barrels of oil.
Operating in this province neatly hands Strike quick and direct access to infrastructure and the gas hungry markets of eastern Australia.
The company already has a number of sales agreements in place including a deal that gives Orora Limited the option to purchase up to 45 petajoules of gas from the Southern Cooper Basin Project at a rate of 4.5PJ per year.
In April, the Australian Competition and Consumer Commission said that “a greater level and diversity of supply” would be one of the key areas needed to increase market conditions on the east coast.
It added that forecasts for liquefied natural gas prices in Asian spot markets were trending up and that could increase domestic gas prices.
This is a potentially lucrative market and if Jaws-1 proves to be a commercial success, Strike has plans for a Phase 1 development capable of producing 50 terajoules per day.
Separately, the company is preparing to drill the West Erregulla-2 well in W.A in early 2019 that targets a conventional gas reservoir similar to the neighbouring Waitsia gas field.