Galilee Energy is making substantial progress in the gas-rich Galilee Basin of Queensland, having ticked several boxes in the past four months which has culminated in 16 wells being brought online and gas rates increasing rapidly.

The world is getting more and more desperate for gas but there are just not enough projects coming into production to help meet that strong demand. This has given rise to “the biggest energy crisis since the oil shocks of the 1970s”.

According to the Australian Competition and Consumer Commission, Australia could be staring down the barrel of a gas shortfall 10 times what it was a year ago.

Galilee Energy (ASX:GLL) is one of the closest to being able to help provide some relief to this massive gas shortage, having made strides in firing up its Glenaras coal seam gas (CSG) project in Queensland.

CSG is an important energy resource in Queensland and production of this gas now makes up an increasing proportion of the state’s gas demand.

Massive certified resource

The Glenaras project has one of the largest certified, un-contracted contingent resource positions on the east coast of 2,508 petajoules (or about 2.4 trillion cubic feet) of gas.

Galilee’s immediate focus is on converting this contingent resource to a maiden reserve.

The completion of a six-well drilling program last month, on budget despite unseasonal rainfall, has put the company firmly on track to deliver that initial reserve in the first quarter of 2023.

Galilee revealed this week that all 16 wells – the 10 original wells along with the six new wells drilled in the recent program – were now online and contributing to the dewatering of the Glenaras multi-well pilot.

Water production is currently over 30,000 barrels of water per day, while associated gas rates have reached around 70,000 standard cubic feet per day and continuing to rise.

Galilee said the current water rate was the highest achieved so far in the pilot program, with significant excess pump capacity still available if higher production rates were required.

From explorer to supplier

“At the outset of the program I was firmly of the view that following its completion the company would be well placed to achieve production rates that should see an anticipated maiden reserve booking for Glenaras in the first quarter of 2023,” managing director David Casey said.

“Galilee has made an unambiguous move forward towards a long-awaited step change in its status from an explorer to a key gas supplier into an extraordinarily tight eastern Australia gas market.”

Galilee has a strong balance sheet, with $16.2m cash in the bank and no debt at the end of the June quarter.

This article was developed in collaboration with Galilee Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.