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Exploration and Development of a Low Rank, Biogenically-Derived Coalbed Methane Prospect, Huntly Coalfield, New Zealand

Tim A. Moore1,2,3

1 Research Manager, Solid Energy NZ Ltd.2 Chief Geologist, Arrow Global CBM3 Senior Fellow, University of Canterbury

CSG Exploration in New Zealand

•Some early evaluations by Ministry in 1980s

•Southgas/Northgas experiences in the 1990s

•Westgas developments early 2000s

•Exploration of low rank coals early 2000s

•Kenham/L&M Group

•RDT

•Solid Energy

•Bridge/Westech

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Waikato Prospect

•Nov. 2002: RDT awarded PEP

•Nov. 2004: CBM Ltd. JV formed Nov. 2004

•June – Oct 05: Exploration phase in Huntly Coalfield

THREE STAGE APPROACH

1. Initial basin assessment

2. Basin wide exploration

3. Appraisal wells (Pilot wells)

Location

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Expected outcomes of each stage

Initial Assessment:

Exploration:

Appraisal:

Indicative gas in-place

Gas volume, quality &water quality

Flow rates (gas & water), completion technologies, permeabilities

Field Development

Stage 1: Initial Basin Analysis

1,048Total0Raynors

29Kupakupa1Weavers

56Ralphs17Huntly East

265Okowhao376Huntly West143Rangiriri West101Horohoro60Churchill

Coal (Mt)Sector

Reported coal volumes Reported gas quality

Gas Measure Result

CH4 % 91.00

CO2 % 5.30

C2H4 ppm -

C2H6 ppm 449.00

C3H6 ppm -

C3H8 ppm -

He ppm -

O2 %

N2 %

H2 ppm 36554

Reported gas volumeHUNTLY TW1 CH4 ISOTHERM

0

1

2

3

4

5

6

7

8

9

10

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

Pressure (MPa)

Gas

Con

tent

(cc/

g) As Analys ed

Curve aa

Dry As h Free

Curve daf

Depth AA

Depth DA F

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Stage 2:Exploration Drill Holes

Location selection based on:

•Geology (seam thickness, depth)

•Previous reported gas shows

•Geographic spread

•Access

Stage 2: Data Collection

Reservoir delineation (rock volume)

Reservoir character (gas volume & flow)

More detail in –

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Stage 2: Detailed Correlations of Reservoirs

Stage 2:Structural Re-interpretation

•Structural model for:

•Renown coal seam

•Kupakupa coal seam

•Basement

•Probability assessment of faults:

•Missing ~50% of faults <10m

•Fault spacing 600 – 800 m

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Stage 2: Detailed isopach & structural models

•Refinement of reservoir vol. model

•Depth related to gas volume model

Stage 2: Data Collection

Reservoir delineation (rock volume)

Reservoir character (gas volume & flow)

More detail in –

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Stage 2: Reservoir Character Data Types

Stage 2: Holding Capacity (Adsorption)

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Stage 2: Measured Gas Content (Desorption)

n = over 100 canisters

(The Problem: Oops!)

250C

310CBefore Desorption [‘fresh’]

After desorption

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(Practical Result: Before and After Desorption)

Methane Adsorption Isotherms daf for Kupakupa Seam

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0 2 4 6 8 10 12

Pressure (MPa)

Gas

Vol

ume

(cc/

g)

Black line = adsorption sample collected in the field

Red line = collected post desorption

1 m = ~35 scf3

SAMPLES MUST BE COLLECTED AND ANALYZED FRESH!!!!

Else OVER Estimation of GIP and/orUNDER estimation of saturation

from Crosdale, Moore & Mares, in press

Stage 2: Gas Quality

0.000.00%N2

0.000.00%O2

403.96154.90ppmH2

280.38338.72ppmC2H6

0.000.00ppmC2H4

1.771.52%CO2

1.7798.43%CH4

Stand. Dev.MeanbasisGas

n = 41

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Stage 2: Origin of Gas – Isotopic Analysis

NZ

from Mares & Moore, in press

Stage 2 Output: Gas in-place uncertainty

Petajoules

++

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Stage 2 : Gas in-place uncertainty Calculation

1. Coal distribution

2. Coal Thickness.

3. A coal density of 1.35 g/cm3

4. Estimation of average holding capacity

5. Calculation of the % gas saturation

Thus, the preliminary gas in-place calculation is:

Gas in Place = Coal reservoir tonnage x gas holding capacity x % saturation

Stage 2 : Gas in-place uncertainty Calculation

Area

Coal Seam Thickness

Maximum Holding Capacity

% Saturation

} ‘Best’ Case

‘Base’ Case

‘Worse’ Case

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Stage 2 : Gas in-place uncertainty Calculation

Stage 2 : Gas in-place uncertainty Calculation

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Stage 2 : Gas in-place uncertainty Calculation

Stage 2: Gas flow modelling - Scenarios

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Stage 2: Water flow modelling - Scenarios

Stage 2: Outcome – Next Stage?

•Gas in-place good (25 – 200 PJ)•Gas quality great (98% methane)•Gas flows good, 2-5 PJ/yr•Water quality good

Stage 2: Exploration results

Stage 3: Appraisal Well Drilling•Five closely spaced wells (~450m)•Test permeability (reservoir character)•Determine completion methodology•Establish gas flow profiles

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Reservoir EngineerSadiq Zarrouk

EnvironmentalManagerReuben Mills

CSG GeologistGrant Gillard

CSG DrillingSupervisorTom Bowman

ProcurementOfficerAndrew Melville

Financial ModellingPete Simpson

CommunicationsAnne Beex

AccountingTim Bishell

Legal ServicesChris Ford

StimulationContractors

Drilling Contractors

EngineeringReservoir dataTBAUoA

HydrogeologicalDataCath Moore LV

Water QualityServices/ConsentsNick Corlis KML

GeologicalReservoir dataTennille MaresUoC

DesorptionServicesCRL

Coal/Gas QualityServicesCRL

Geophysical ServicesWeatherfords

CSG Project ManagerTim A. Moore

Adm

inis

trat

ion

Appr

aisa

l Wel

l Ope

ratio

n

CSG Organisational Chart

Marketing/CommercialisationAndy Matheson

Site ManagerJaco Fourier

All Site operationsH&S

Stage 3: Appraisal Wells

Confidential - SENZ

•Purchase of five sets of pumps, transducers and various casing sizes for five wells to over 450 m

•Site four wells on a 400m box grid with one well in the centre (total wells 5)

•Drill the first four wells (Baco -1, Mimi -1, Jade -1 and Jasper -1) down to the upper target reservoir (Renown seam) with barefoot completions

•Drill one well (Groover -1) directly the second target reservoir (Kupakupa seam), fully cased to bottom of hole, perforated in reservoir area and water enhancements conducted.

•Three cores of the Renown were taken for desorption, adsorption, gas quality, gas isotopes and coal character (a total of 31 samples).

•Water stimulations (conducted by Halliburton) on the Jade -1 and Baco -1 wells which were completed in the Renown

Groover-1

Jasper-1

Baco-1

Mimi-1

Kaiser-1Jade-1

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Appraisal Wells

Confidential - SENZ

•Production testing of Mimi -1 and Jade -1 ongoing

•Commission feasibility study of gas pipelines to market

•Commission marketing study for options of initial gas take

•Extensive water testing of reservoir water (all samples show compliance)

•No Health & Safety or Environmental incidents throughout the Appraisal well programme

Groover-1

Jasper-1

Baco-1

Mimi-1

Kaiser-1Jade-1

Well Design: Jasper-1

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Pumps, Transducers & Monitors

Gas to Surface

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Gas to Surface

Summary

•Exploration phase successful:•Reservoir & gas data good

•Appraisal phase underway:•Drilling Aug – Sept 06•Testing of Renown for 4-7 months•Testing of the Kupakupa 4-7 months•Initial production results promising•Delineation of best completion design

•Decision to go forward:•By December 07

•Commercial development of gas:•Possibly by Dec 08

Confidential - SENZ

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