Strike gas theory checking out in South Australia

Strike Energy is confident that its innovative hydraulic stimulation of the potentially ground breaking Jaws-1 coal seam gas well has achieved everything needed for the well to become “a major productive area” and the company is now on a determined pathway towards booking a gas reserve at the South Australian project.

In an update to the ASX, the emerging east coast gas producer provided the results of detailed technical work undertaken since last month’s completion of Jaws-1 at the company’s 66.67%-owned Southern Cooper Basin Project.

The deep, horizontal well 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. Gas flows of this magnitude would be a genuine game changer in the energy-starved east coast market.

Production testing due to get underway early this month will be the acid test, however Strike’s technical team can already draw a lot of satisfaction from the way each new set of results is validating their bold punt on such a deep coal seam gas well.

Strike reported this week that an updated technical assessment of newly collated data confirmed that Jaws-1 should meet its objectives of becoming commercial.

Following analysis of new data from side-wall pressure coring, wireline logging, microseismic and tilt meter monitoring, fracture traces and micro imaging, the company said it is “confident that the reservoir, in combination with the Jaws production system is capable of producing flow rates of natural gas to surface sufficient to underpin the booking of a reserve.”

Strike Managing Director, Stuart Nicholls, said: “When we model the newest and latest subsurface information in conjunction with the Jaws production systems, we are very optimistic about the well’s ability to deliver against its primary objectives of producing commercial flow rates of gas and, as a result, Strike is eager to begin the production testing.”

Reservoir data obtained from side-wall cores has backed up the company’s assumption of a gas content of 6.0 cubic metres per tonne of coal.

According to the company, analysis of the coal suggests high porosity and increased gas flows along the coal seam boundaries, which Strike said is a strong positive for the reservoir.

Preliminary estimates suggest that about 8.5-9 million cubic metres of rock has been stimulated, with a theoretical drainage area of at least 140 acres around the Jaws well.

Flowback of the reservoir was successful, with sufficient fluid and excess proppant returned to the surface to be confident that the fractures remain open and in communication. In addition, the previously drilled Klebb-1 and Klebb-2 pilot wells are producing water at increased rates, which will assist the dewatering of Jaws-1.

Such is the demand for gas on the east coast that Strike already has a number of sales agreements in place. With the Jaws-1project so close to the Cooper Basin infrastructure, getting the gas market could be much faster and cheaper for Strike than a number of competing gas projects that are racing to fill the east coast supply gap.

Before drilling Jaws-1, Strike’s technocrats, led by Managing Director Stuart Nichols, developed a theory based on about 5 years of work undertaken by previous management that ultimately failed to turn commercial.

The theory was that if drilled the right way with the right equipment deployed into the right size hole, a new coal seam gas well could potentially be profitably developed – even at over 2km deep which is practically unheard of.

Almost every piece of data collected by Strike whilst drilling Jaws-1 and its interconnecting vertical well has confirmed that theory and all that remains now is for the flow test to take place without any unforseen problems.

Not for the faint hearted perhaps but the prize is potentially very lucrative.