It is reported that L&M Energy is setting itself up to take advantage of strong gas and electricity prices and the potential gas supply/demand imbalance in New Zealand with an appraisal program starting on a new coal seam gas permit.

L&M will begin a coal seam gas appraisal program within its Kaitangata permit in mid-October. Located close to the major city of Dunedin in New Zealand South Island, Kaitangata is ideally placed in being able to supply power generation to significant agriculture and domestic demand as well as compressed natural gas to a strong local bottled gas market.

Target coal seams within Kaitangata are Cretaceous in age, the same age as the Morley Coal Measures within L&M’s Ohai Coalfield which has 274 petajoules of proven probable and possible coal seam gas reserves. Cretaceous age coal seams typically contain up to five sub-bituminous coal seams with individual seam thicknesses up to 15 metres.

Testing by L&M has shown good permeability characteristics in the coal seams at Kaitangata with two seams showing permeability between 100 milliDarcies and 900 milliDarcies. Gas content tests have been made at relatively shallow depths, 150 meters to 250 metres with results averaging 0.5 to 1.0 milliDarcies per tonne.

The first well, Wangaloa-1 will be drilled to a target depth of 515 metres to test the coal seam gas potential of the five sub-bituminous coal horizons.

L&M plans to case and suspend the well as a future production well in order to carry out further testing at a later date, pending positive results.

(Sourced from www.proactiveinvestors.com.au)