While the Greens and independent MPs decry the Australian government’s release of new offshore petroleum acreage, gas production at Comet Ridge’s (ASX:COI) Mahalo North-1 pilot well has continued to increase.

Since the coal seam gas well moved into the production phase back in April this year, gas flows have steadily increased to the current 1.7 million cubic feet per day – the highest recorded flow from a pilot well in the Mahalo Gas Hub area in Queensland’s Bowen Basin.

In a major boon to the company, the production data also suggests that the well is draining a much larger area than originally modelled, which indicates that future development wells could be spaced further apart while maintaining production.

This will of course improve project economics as it means that Comet Ridge will not have to drill as many wells.

Performance of the pilot also neatly confirms that the high productivity fairway in the adjoining Mahalo gas project (Comet Ridge 70%) extends into Mahalo North.

Managing director Tor McCaul is pleased about the result in terms of both production rates and technical data for use in development planning and modelling.

“Mahalo North is more than 15km from another successful pilot well, Mira 6, which is located in the Mahalo Gas Project, so we have established a very large, sweet spot along the high productivity fairway, which also contains a third successful pilot well at Mahalo 7,” he added.

Well-timed for gas production

While Mahalo North is subject to domestic supply conditions, this is no impediment to its development given the projected shortage in east coast gas supplies, which have sent prices soaring this year.

Production from the project could potentially be piped to the Mahalo Gas Project, where Santos (ASX:STO) is acting as the development operator.

The major’s involvement presents the opportunity to develop Mahalo using a similar low cost modular gas plant design which Santos has successfully implemented at the nearby Arcadia project, which currently produces more than 100 terajoules (94.78MMcf) of gas per day.

This could result in a relatively quick development, which is well-timed given the projected shortage in gas supplies over in Australia’s east coast.

Mahalo’s proximity to existing gas infrastructure also lends itself to a quick development turnaround time, which is completely unlike developments in the Beetaloo sub-Basin in the Northern Territory.