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Galilee Energy Secures Rig for Glenaras Multi-lateral Pilot Programme

Source: 2/18/2019, Location: Not categorized

Galilee Energy has provided an update on the upcoming drilling operations at its 100% owned and operated Glenaras multi-lateral pilot programme located in the Galilee Basin.

As previously discussed in the recent Quarterly Report, the two multi-lateral wells, Glenaras 10L and 12L, continue to produce at excellent water rates. The performance is consistent with a high quality, bounded coal seam which is both regionally continuous and with good permeability. These results augur very well for future development of the project as the area will need less wells per unit area due to this high connectivity and productivity.

With respect to the Pilot, which sought to draw down the pressure in a relatively small area of coal, the good permeability is causing the two lateral wells to drain a considerably larger area of coal. This outcome is significantly increasing the water production volumes required before reaching the critical depressurisation threshold, which is the trigger required for gas desorption and gas flow from the coal.

Therefore, the well density near the Pilot needs to be increased in order to accelerate water production and more efficiently lower the pressure below critical desorption to achieve the desired commercial gas rates.A more efficient design of the Pilot to achieve better shielding of a central producing well will also be instrumental in accelerating this depressuring of the coal and subsequent gas desorption in the Pilot area.

Three New Lateral Wells to Accelerate Time to Results

Galilee plans to upgrade the current Pilot with additional shield optimisation. The aim is to continue to use the excellent results of Glenaras 10Land 12L, such that they would now act as shield wells to a new central lateralwell, Glenaras 14L. The Glenaras 14L lateralwellis planned to be drilled in the middle of the Pilot and will be the key well to drawdown the central area of the Pilot below critical gas desorptionpressure. This is similar to the originalPilot design of Glenaras 10L, 11L and 12L but now on a tighter well spacing.

To ensure we have shielding over the central area of the Pilot, Galilee is also planning perpendicular lateral wells (Glenaras 15L and 16L) across each end of the Pilot in order to ensure there is no water support fromeither of these directions.

Galilee is very confident that this design will create both the required well density and shielding in the Pilot area to drawdown coal over a large enough area to achieve its commercial gas flow objectives.

The planning of this programme is now well underway and Galilee has secured a contract with the Easternwell Rig 103, with the aim of commencing drilling in early April 2019.The drilling programme is scheduled to take approximately six weeks and the aim is for the new lateral wells to beon production by late June 2019 following the necessary completion and tie-in operations.

Once the Pilot is fully operational, it is expected that three full months of production drawdown will be required in order for material gas production ratesto be observed.Importantly, the two existing wells Glenaras 10L and 12L will onlybe shutin to facilitate drilling operations and will recommence full drawdown as soon as drilling operations are complete.

The expected cost of this additional three-well lateral programme including drilling, completion and tie-in is approximately $8.0million,which is well within the company’s current cash position.

Given the benefit of our learnings from the previous lateral drilling programme, considerable work has been undertaken on the well design for the new drilling campaignand to mitigate potential risks. The structure of the coal is now well understood and as such the level of complexity with respect to the steering tools has been reduced. Given the simpler drilling tools required, a more thorough understanding of the geology and clear plans on well clean out, Galilee is confident that itcan address any potential drilling challenges.

Managing Director Peter Lansom stated:

'With a strong balance sheet and the drilling rig securedwe are now extremely well placed to deliver on our strategy of converting Resources to Reserves and ultimately bringing material volumes of gas into the east coast market. The upgraded programme has not changed the Company’s target of 500 PJ 2P Reserves from a successful pilot programme and with the benefit of our understanding of the productivity of the coal in the last 4 months we are very excited for the future of the Galilee Basin.'

An operational update will be provided to the market once rig mobilisation dates are confirmed.

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