The project lies 240km west of Gladstone and includes CSG-to-LNG players Santos and Australia Pacific LNG in the joint venture.

The Mahalo-7 surface-to-inseam horizontal well has been designed to maximise the use of previous reservoir data and has been positioned inside the existing pilot wells.

The well will be drilled down to the coal seam at 230m depth, where it will run through around 500m of the main Castor-Pollux coal seam before intercepting the Mahalo-6 vertical well.

Mahalo 6 is configured as a production well with flowlines, metering and separation facilities at surface, making it a cost-effective option for testing.

The well will be used to lift the water and gas from Mahalo-7 using its production infrastructure.

The Mahalo JV has two production pilot schemes at the Mahalo and Mira areas that have been operating since early 2013.

The JV upgraded the 3C contingent resources for Mahalo from 442 petajoules to 468PJ in August, while 2P and 3P reserves were recorded at 22PJ and 124PJ respectively - though these figures only cover a small appraised portion of ATP 337P.