Queensland Pacific Metals embarks on gas adventure with spud of first new production well imminent

Queensland Pacific Metals poised to start drilling new gas production wells at Moranbah
The planned seven new wells are in highly productive area of the MGP field
Each well consists of a vertical production well paired with an in-seam lateral
Well workover program expected to increase well count from 118 to 130 producers

Special Report: Queensland Pacific Metals has wasted no time executing its new strategy to focus on advancing its Moranbah gas project, with a rig on site to spud the first of seven planned production wells.

Earlier this week, the company announced its decision to focus on leveraging the existing reserves and production at its Moranbah gas project in Queensland to help meet the growing need for natural gas in eastern Australia.

Queensland Pacific Metals (ASX:QPM) originally acquired the project to secure gas supplies for the TECH nickel project, but the Australian Energy Market Operator’s forecast that gas shortfalls will start occurring on extreme peak demand days from 2025 warranted a change in strategy.

Moranbah captures waste mine gas (methane) from coal mines and makes it available for use to customers.

It currently produces about 10 petajoules (PJ) of gas per annum and has current proved and probable (2P) reserves of 240PJ.

For context, each petajoule equates to about 0.95 billion cubic feet (Bcf) of gas with 1Bcf being enough to power more than 24,000 homes for a year.

To make full use of the asset, the company plans to carry out additional well workovers to essentially resurrect existing off-line wells, optimise the gas gathering system, increase third party production of waste gas from regional coal mines, and develop a portfolio of new baseload and peaking generation at its facilities.

Drill rig on site at TB118V1. Pic: Queensland Pacific Metals

Cranking up gas production

However, its most immediate action is to increase production by drilling and completing seven new production wells before the end of this year, a process that will start imminently.

The drilling rig is already on site and ready to spud TB118V1, the first of seven wells that the company is drilling under the Teviot Brook South program.

These planned wells are in a highly productive area of the MGP field and each consists of a vertical production well that is paired with a lateral well drilled in the Goonyella Middle Seam to intersect with the vertical well.

Notably, the in-seam laterals will average about 1,000m of exposure to the coal seam, which will the effect of increasing gas production.

QPM expects to complete drilling of all the vertical wells by the end of June and the lateral wells from July to September.

They will be completed with pumps and surface equipment installed, commissioned and brought online progressively during the December quarter.

Each well is expected to have a build in gas production to a peak rate before transitioning to a decline phase with a long production tail.

As an indication of how long the production tail can last, there are many wells across the MGP field that have been in production for over 15 years with stable output.

“The Teviot Brook South program will be the first new owner-drilled wells for the Moranbah Project in many years,” newly appointed chief executive officer David Wrench said.

“We are excited at the increase in production these wells will deliver, which will provide a significant step change in the business for QPM Energy.”

Well workovers

The company is also continuing its well workover program to bring wells that were either offline or suspended back into production.

Wells stop producing due to pump failures, tubing leaks or other downhole blockage, requiring workover to replace and repair the equipment required to bring the well back online.

The Moranbah project currently has 118 producing wells, up from the 96 wells when it was acquired in September 2023.

QPM currently has two workover rigs on site and expects to have 130 producing wells by the end of May.

Drilling and workover costs are being funded under the Dyno Nobel development funding facility, which was provided to fund the capital costs associated with increasing gas production.

This has an initial limit of $80m with the ability to increase to $120m if required with repayment made through the delivery of gas over the term of QPM Energy’s gas supply agreement with Dyno Nobel.

This article was developed in collaboration with Queensland Pacific Metals, 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.