The calculations, by independent firm DeGolyer and MacNaughton, include 150Bcf (1C) and 225Bcf (3C) and are part of what Strike managing director David Wrench calls a low cost resource underpinned by existing gas sales agreements.
Strike owns 66% of the resources in PEL 96, with Energy World Corporation holding the balance.
The company has now drilled four successful wells – Le Chiffre-1, Klebb-1, Klebb-2 and Klebb-3. However, the contingent resources are only for the initial zones tested in Le Chiffre-1 and Klebb-1 wells and, considering the thickness of the coals intersected, Strike is confident it is defining a multi-trillion cubic feet resource given it has only drilled in a small area so far.
Only 30% of the Patchawarra Vu coal zones have been tested.
Strike has increased the Phase 1 area to 45,500 acres based on revised mapping of the coals following recalibration of seismic data to drill results.
Given that the contingent resource estimates have been assigned to an aggregate of around 6000 acres in the Le Chiffre-1 and Klebb-1 areas, there is considerable scope to increase the size of the contingent resource with planned infill drilling.
To convert to reserves, the contingent resources need to flow at sustained commercial gas flow rates and more wells will be required to better define gas and water production rates, as well as volumes, the drainage pattern and well spacing, before they can be booked as reserves.
Additional drilling will also be required to confirm the reservoir quality and gas content of the coals outside the existing contingent resource areas in order to grow and upgrade the resource to reserves.
The next phase of the PEL 96 program will require fraccing of Klebb-2 and Klebb-3 for flow-testing.
That will be followed by drilling and flow testing of offset wells at Le Chiffre to confirm the commercial production potential of a demonstration project in the pre-development phase.
Two additional infill wells, to confirm reservoir quality and gas contents of the coals outside of the existing contingent resource areas to add contingent resources and reserves, are also planned.
The delivery of the first contingent resources means Orica now has 30 days to trigger its option to subscribe for new shares in Strike for a payment of $2.5million. It must make the first gas prepayment under the existing 250 petajoule gas sales agreement.
The report also triggers Orora’s gas prepayment under the 45PJ GSA within 30 days .
“The review confirms that the project is already very close to being economic and our testing program over coming months specifically targets the final results required to prove commerciality and achieve reserve certification,” Wrench said.
“The Southern Cooper Basin Gas Project is one of the few projects actively moving forward with the potential to supply substantial quantities of competitively priced gas to Eastern Australian gas markets.”
