Comet Ridge's ATP 1191P (formerly ATP 337P) Mahalo asset is
located in the Denison Trough area of Queensland's Bowen Basin
near Rolleston, and covers an area of 911 km2. Comet Ridge
has a 40% interest in ATP 1191P Mahalo JV Project Area with
a clear focus on maximising 2P Reserves in the block. ATP
337P was awarded on 1 October 1983 for a period of 4 years
to CSR Ltd (60%) and OCA (40%), and included 181 blocks.
ATP 337P was recently converted from a 1923 Petroleum Act
permit to a Petroleum and Gas (Production and Safety) Act
2004 permit. This process included a change in permit number
from ATP 337P to ATP 1191P and the permit remains an Authority
to Prospect. ATP 1191P has been granted for 4 years from 25
September 2015 until 24 September 2019.
The Mahalo JV Project Area is a subset area of ATP 1191P,
and covers approx. 11.6 graticular blocks.
Comet Ridge farmed-in to the Mahalo JV Project Area acquiring
a 40% interest in the JV Project Area in 2004, with Santos
and APLNG retaining a 30% interest each. Santos and APLNG
each hold a 50% interest in the remainder of ATP 1191P. Comet
Ridge reduced its interest in the Mahalo JV Project Area to
35% in late 2011 through the divestment of a 5% interest to
Stanwell Corporation. In late 2014, Comet Ridge announced
the buy back of a 5% interest previously sold to Stanwell,
returning Comet Ridge’s interest in the Mahalo JV Project
Area to 40%.
Twenty one wells have been drilled in the Mahalo JV Project
Area in total, with eighteen of these drilled since Comet
Ridge acquired its interest in 2004.
ATP 1191P is located in the Denison Trough in the Bowen Basin
in central Queensland. Early petroleum exploration in the
region had focussed on conventional resources in Permian sandstone
reservoirs, resulting in the discovery of several gas fields.
Arcturus and Yandina conventional gas fields are located just
to the west of the permit area. These gas fields are serviced
by processing and separation facilities located in the northern
Denison Trough and gas is distributed via the state natural
gas pipeline network.
Prior to commencement of CSG exploration in the permit area,
very few petroleum wells had been drilled within the Mahalo
JV Project Area since Sunlight 1, a conventional well in 1966
and Humboldt Creek 1, in 1970. Lowesby 1 was drilled in 1991
in the area excised from the centre of the ATP 1191P Mahalo
area. Gas indications were noted over coal seams confirming
the presence of gas associated with the coal seams.
The Mahalo JV Project Area is prospective for both coal seam
gas and coal extraction in the Permian Bandanna Coal Measures
that are draped over a structural high known as the Comet
Ridge nose anticline.
Over 50 shallow coal holes had previously been drilled within
the northern part of the project area where coals are at shallow
depths. These shallow wells provided confidence that net coal
thickness of coals was extensive across the Mahalo JV Project
Coal seam gas exploration commenced in the
Mahalo JV Project Area in 2004.
Fully cored coal seam gas exploration wells, Mahalo 1 and
Somerby 1 were drilled as part of the Comet Ridge farm-in
to evaluate extent, permeability and gas content of the coal
seams in the Bandanna Coal Measures in north-western part
of the tenure area. 6-7m of net coal was intersected with
gas contents over 5m3/t.
This initial exploration phase was followed in 2006 by Mahalo
2 (100m from Mahalo 1) and Mira 1 and Humboldt 1 in the eastern
part of the permit area to verify extent, permeability and
gas content of the coal seams in the Bandanna Coal Measures.
Permeability ranged between 6 and 56 millidarcies, average
gas content ranged between ~5 and 7.6m3/t and up to 8.1m of
net coal was intersected. Average gas content and permeability
figures were encouraging and similar to other commercial coal
seam gas development projects in Queensland.
On completion of these wells, Comet Ridge had earned 40% interest
in the project.
Scrubber Gully 1 core hole was drilled in July 2009, successfully
demonstrating coal continuity from adjacent permits into the
central-eastern portion of the joint venture area.
Concurrently, coal seam gas exploration activities increased
in the surrounding northern Denison area first with the drilling
of Katrina 1 in 2007, Luka 1 in 2009 and Bungawarra 1 and
2 in mid-2010. These wells were drilled outside the Mahalo
JV Project Area, but both Katrina 1 and Luka 1 were drilled
near the boundary of the Mahalo JV Project Area by Comet Ridge’s
ATP 1191P Mahalo Joint Venture Partners.
In July 2012, the Joint Venture commenced work on the first
four-well pilot scheme with the drilling of the Mahalo 3,
4, 5 and 6 wells, north of Rolleston. Drilling was completed
at the end of July. Each of the wells intersected approximately
7 metres of net coal in the main Castor-Pollux seam as anticipated.
This area of the block has shown good continuity and thickness
of coal with very good to excellent permeability across the
main reservoir section observed just after drilling. Following
on from drilling of the four Mahalo field pilot wells in mid-2012,
the Joint Venture commenced drilling of the second pilot at
Mira in December 2012. Each of the wells intersected approximately
eight and a half to nine metres of net coal. Like the Mahalo
field pilot scheme, 13 km to the northwest, Mira continued
to demonstrate excellent coal productivity. Completion operations
were then undertaken, with both the Mahalo and Mira pilot
wells set up for production with tubing and pumps installed.
These pilot programmes are a key component in the Joint Venture’s
plan to book gas reserves across a large part of the Mahalo
JV Project Area. Having two independent pilot schemes operating
concurrently significantly increases the likelihood of achieving
a commercial gas rate for establishing reserves, and also
allows the Joint Venture to gather valuable data on optimal
well completion design for field development.
Drilling operations then stepped-out from the pilot area in
early 2013 and coreholes were drilled southeast, south and
southwest of the Mahalo and Mira pilot areas at Scrubber Gully
2, Turkey's Nest 1 and Humboldt Creek 2. Scrubber Gully 2
was a 5.2 km step-out from Mira and intersected 7.2 metres
of net coal whilst Turkey's Nest 1 was drilled 5 km southwest
of the Mahalo pilot intersecting 9.6 metres of net coal. Humboldt
Creek 2 was drilled in the southern part of the block, intersecting
9.4 metres of net coal.
The Mahalo and Mira pilots were commissioned in the final
quarter of FY2013.
Following the commissioning of both the Mahalo Field and Mira
Field pilot schemes, the Joint Venture focus was on dewatering
the coals to enable gas to flow.
It was established that the Mahalo Pilot required some remedial
work to improve well productivity and this was carried out
in early 2014 with Mahalo 3 and Mahalo 5 both stimulated via
under-reaming and jet washing. In line with current practice
in other parts of Queensland, the wells were brought on at
a low pump rate with the plan to steadily increase pumping
speeds over time which is designed to protect the reservoir
from shock or damage. Gas production has been rising in the
Mahalo Pilot since early March 2014 when the wells were brought
back online following the stimulation.
As part of the plan to build reserves and deliverability,
Comet Ridge and its joint venture partners approved the drilling
of the first horizontal well (Mahalo 7) at the Mahalo Field
The Mahalo 7 horizontal well was completed in December 2014.
This involved removing the existing pump from Mahalo 6 and
running in homing equipment in the well to allow for the Mahalo
7 intercept. The Mahalo 7 horizontal well was drilled horizontally
through a significant section of the coal reservoir, intercepting
the Mahalo 6 well on the first attempt. A new pump was then
run into the Mahalo 6 vertical well to lift the water produced
from the Mahalo 7 horizontal well section. This work was undertaken
in mid-December 2014 and the pump was put on line with water
production commencing on 28 December 2014. The Mahalo 7 surface
to in-seam horizontal well was designed to maximise the use
of current reservoir data and has been positioned inside the
current pilot wells. The well contacted approximately 360
metres of coal in the horizontal hole section.
The Mahalo 6 vertical production well is now being utilised
to lift water from the Mahalo 7 horizontal well. The pump
in Mahalo 6 is initially being run at a very low speed such
that pressure drawdown is kept very low with the intent that
the drawdown will be gradually increased over time. Gas rate
from Mahalo 6 had exceeded 360,000scf/day in early Q1 2016
and continues to increase. The forward plan is to gradually
decrease separator pressure in several stages, before starting
up the vertical wells, one at a time, which is likely to commence
during Q1 2016.
At the Mira Pilot Scheme, approximately 13km
southeast of the Mahalo Pilot, the initial water rates observed
were in line with the high productivity seen when the wells
were drilled in January 2013. A work-over to restore the bottom
hole assembly on the Mira 3 well was successfully carried
out in September 2013. A series of pressure build up surveys
were completed in the middle of May 2014 with three of the
wells recommencing dewatering. One well (Mira 2) is being
used as a pressure observation well, whilst the Mira 3, 4
and 5 wells are being produced to dewater the reservoir and
allow gas to flow. As with Mahalo, the Mira Pilot wells have
been brought online slowly with pump speeds being closely
controlled to limit excessive pressure drawdown.
RESERVE AND RESOURCE CERTIFICATION
On 25 October 2010, Comet Ridge announced a Contingent Resource
Certification by NSAI for the Mahalo Project, the first certification
for Comet Ridge in any of its Australian or New Zealand acreage.
A considerable amount of appraisal work has occurred in the
project area since the initial contingent resource booking
in 2010. On 28 August 2014 Comet Ridge announced an initial
independently certified Reserve Statement from the Mahalo
JV Project Area and material upgrade to Contingent Resources.
On 2 December 2015 Comet Ridge announced an increase in 2P
and 3P Reserves in the Mahalo JV Project Area.
The assessment of Proven, Probable and Possible (3P) Reserves
relates only to an area across the northern part of the block
representing slightly less than 25% of the total permit area.
As such, significant upside exists to add incremental reserves
as the tenement area is further appraised and developed.
The assessment of Proven and Probable (2P) Reserves for the
Mahalo block applies only to a small area around the Mahalo
Pilot Scheme, which represents slightly less than 5% of the
permit area. As a result of the success of the Mahalo horizontal
well in providing significant gas flows, and also additional
open source well data, both 2P and 3P Reserves have been increased
by converting part of the significant Contingent Resources
in the block to the higher category of Reserves. It is Comet
Ridge’s intention to continue conversion of 3P to 2P
over the coming months.
Note: Gas Reserve and Resource numbers
have been rounded to the nearest whole number.
1) COI's net Reserves have not bben adjusted for fuel or
shrinkage (estimated at approximately 3%) and have been
calculated at the wellhead (which is the reference point
for the purposes of Listing Rule 5.26.5).
2) 1P Reserves have not been attributed to the Mahalo Block
under SPE 2007 PRMS Guidlines as the field is not yet at
develpment stage with an apporved development plan.
This upgrade in reserve certification demonstrates
the commerciality of the Mahalo JV Project Area. The Project
is located just 11 kilometres from an infrastructure connection
to the Gladstone LNG market with significant gas supply requirements
and rising prices. This is a significant milestone for Comet
Ridge and is a very important step in the future development
plan for the Mahalo JV Project.
The company’s plan is to continue to build reserves
and upgrade the category of these reserves as further production
data from the Mahalo JV Project Area is collected and additional
appraisal is undertaken. Uncommitted gas reserves in eastern
Australia are becoming increasingly scarce so we are pleased
to have a material volume of 3P reserves to work into the
2P category and a very large contingent resource base to work