Comet Ridge is one step closer to hitting the market with its Mahalo North project after signing a non-binding letter of intent with Denison Gas.
The deal will allow discussions for up to 10 terajoules of gas per day to be processed and transported from the Bowen Basin-based Mahalo North block via Denison Gas’ pipeline.
The pipeline runs down the western side of Mahalo North and connects to the Queensland gas pipeline, which links to Gladstone and the further domestic market, supporting the Queensland government’s policy of supplying gas to the local market.
Comet Ridge managing director Tor McCaul said first gas from its flagship Mahalo project remained the company’s priority, but early gas from its neighbour has strong economic appeal.
“If we can build up to 10 terajoules of gas to market from the Mahalo North block commencing in the first part of 2021, we can generate solid revenue for Comet Ridge,” McCaul said.
“The offtake of gas from Mahalo North would be lower than offtake planned from the larger Mahalo project, but offers us a much higher equity level for gas sales.”
Mahalo’s fairway is traceable into the Mahalo North block through the same coal reservoir and previous exploration has implied gas in the shallow coals extended into Mahalo North.
The company has divided the initial fairway at Mahalo North into two zones. Luton two zone is adjoining with the Mahalo project and will be evaluated.
“The northern zone in the fairway requires additional delineation by appraisal drilling and seismic data acquisition and will be evaluated, while the southern zone is brought into production,” McCaul said.
Groundwork and coal seam gas well drilling is expected to start in early to mid 2020 after the environmental authority has been approved.