Metgasco primed for more Cooper Eromanga Basin gas drilling

Metgasco (ASX:MEL) will soon have a better understanding of its Cooper Eromanga Basin gas acreage with a rig mobilising to drill the first of two wells.

The rig is expected to spud the Vali-2 appraisal well within the next couple of days to appraise the extent of the Patchawarra Formation gas accumulation discovered in Vali-1 ST1 well in Queensland.

Vali-2 will also assess the potential for further gas at a crestal location in the Toolachee Formation that was not tested in the previous well.

Once Vali-2 is drilled, the rig will move on to drill the Odin-1 exploration well in South Australia that targets prospective gross recoverable resources of 12.6 billion cubic feet (Bcf) of gas.

Odin-1 will test the Toolachee and Patchawarra formations, identified by recent 3D seismic, updip of the Strathmount-1 discovery well that was drilled in 1987 but plugged and abandoned as a non-commercial find due to low formation permeability and a poor mud system likely to have caused formation damage.

Strathmount-1 is interpreted to have conventional gas pay in the Toolachee Formation and both conventional and low permeability gas pay in the Patchawarra Formation. The stable gas flow rate of 4.3 mmscf/d achieved in August 2020 on the Vali-1 discovery well following hydraulic stimulation on low permeability Patchawarra gives confidence that a commercial gas flow-rate can be achieved in the Odin-1 prospect by utilising similar production enhancement technology.

These wells and other potential gas prospects such as Kinta in the area may form the basis for a potential production hub at Vali, with operator Vintage Energy (ASX:VEN) planning to have flowline infrastructure feed gas from successful wells into the Vali hub where gas will be transported to market.

Metgasco, Vintage and New Hope Corporation (ASX:NHC) subsidiary Bridgeport (ATP2021 JV) have already received a draft determination from the Australian Competition and Consumer Commission to jointly market gas from the Vali field.

“The pending spud of Vali-2, followed by Odin-1, initiates an exciting period for Metgasco as the appraisal/exploration drilling program is anticipated to boost further gas reserves to underpin the commercial development of the Vali gas field and extend the field life through the potential emergence of a regional production hub to service the ATP2021& PRL211 permits,” chief executive officer Ken Aitken said.

Vali gas discovery overview.

The Vali-1 well was spud (first drilled) in December 2019 and discovered gas in Permian-aged sands.

A subsequent sidetrack was successfully stimulated and flow tested at a stabilised rate of 4.3 million standard cubic feet of gas (MMscf/d) in the third quarter of 2020.

Vali has certified proved and probable (2P) reserves of gross 33.2 petajoules – 8.3PJ () of gas net to Metgasco.

The ATP2021 JV elected to assess the resource upside of the Vali gas field and surrounding area via drilling Vali-2 and Odin-1 to optimise the flowline size and route to handle peak gas rates within the production hub as well as to allow gas marketing advantages.

The Vali-1 well drilled in January 2020, which discovered the Vali gas field allowed Metgasco to remain 25% licence holder and be free carried on Vali-1 drilling by partners Vintage and Bridgeport due to farm-out deals signed in Q2/Q3 CY 2019.

Over at Odin, the company is paying 25 per cent of the costs of drilling the Odin-1 well for a 21.25 per cent interest in the permit which was agreed in a farm-in deal on the PRL211 licence agreed in Q4 CY2019.

This article was developed in collaboration with Metgasco, 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.