DISCOVERY AND DEVELOPMENT OF THE KOGAN NORTH AND TIPTON WEST COAL SEAM GAS (CSG) FIELDS, SURAT BASIN, SOUTHEAST QUEENSLAND

Abstract

In 2001, Arrow Energy NL, a fledgling coal seam gas (CSG) explorer, drilled the first wells of a multi-well exploration program in two Authorities To Prospect (ATP) permits—ATPs 683P and 676P—that covered an area totalling 13,817 km2 of the Jurassic Walloon Coal Measures in the eastern Surat Basin. The objective was to discover significant CSG resources and, if successful, to commercialise to reserve status. Early exploration success in 2002 saw the discovery of the Kogan North and Tipton West CSG fields. This paper reviews the discovery and subsequent appraisal and development work that Arrow Energy has completed to establish production from these fields.

By 2004, Arrow Energy had independently certified Probablereserves in the Kogan North field of 85 PJ, and Possible reserves of 157 PJ. Results from a five-well CSG pilot operation demonstrated the feasibility of commercial gas flow rates sufficiently to justify commercialising CSG from the Walloon Coal Measures in the Kogan North field. Under the terms of a staged development agreement, CS Energy Ltd—Queensland’s largest electricity generator—farmed into the Kogan North Project to earn a 50% interest in PL194 and an adjoining portion of ATP 676P by funding A$13.1 million of the project’s development and appraisalcosts. The funds provided by CS Energy covered the majority of the development costs required for Arrow’s Kogan North development project. The initial gas sales contract from Kogan North will supply sales gas of 4 PJ/a for 15 years to CS Energy from March 2006. Arrow Energy retains the remaining 50% interest and operates the project.

With 25 PJ Probable, 90 PJ Probable and 1,980 PJ Possiblegas reserves certified independently, the Tipton West field could potentially be one of the largest onshore gas fields in eastern Australia. Final appraisal of the Tipton West field is currently underway with financial close on the development expected in late 2005. Beach Petroleum Ltd has entered into an agreement to fund the A$35 million required for upstream developmentto supply the initial 10 PJ/a sales gas from the field in 2007, in exchange for 40% interest in th Dalby block of ATP683P. Arrow Energy retains the remaining 60% interest and operates the project.

Diligent environmental and land management systems are required with the development of any CSG field. For example, formation water produced from CSG activities needs to be managed effectively. To deal with this water Arrow Energy is developing and implementing several innovative strategies, including forced evaporation dams, water supply to local coal-washing plants and trialling desalination plants to provide drinking water for nearby towns, aquaculture and stock watering.

Arrow Energy has also implemented a Cultural Heritage Management Plan within the development areas in cooperation with the local indigenous claimant groups, the Western Wakka Wakka and the Barunggam peoples. The plan was designed to minimise risk of any disturbance to indigenous artefacts and areas of significance during the exploration, construction and ongoing operations associated with the development of both gas fields.

The discovery and future development of the Kogan North and Tipton West fields has been achieved by using an appropriate mix of geological evaluation, efficient drilling techniques, innovative well completion methods and successful marketing strategies, integrated with cooperative environmental and cultural heritage management systems.