BRISBANE, Australia -- Strike Energy is working in unusual gas-saturated coal reservoirs in the Cooper Basin in Australia, said David Wrench, managing director, Strike Energy Ltd. Wrench spoke at Hart Energy’s first DUG Australia Conference & Exhibition in Brisbane. The ASX-listed micro-cap firm also has interests in the U.S. Eagle Ford play.

The company holds three licenses in the southern Cooper Basin, some 150 miles south of Moomba. Strike’s play differs considerably from the basin-centered and shale-gas plays other operators are pursuing in the deeper parts of the basin, such as the Nappamerri Trough. Rather, Strike’s primary targets are gas-saturated coals, found generally at depths between 1,500 and 2,000 meters. Coals across its permits are up to 100 meters thick, and individual seams can be 50 meters thick. They are Permian in age, very thermally mature, and appear to be saturated with dry gas.

“They actually look like shales that think they are coals,” said Wrench. “It’s quite different from the huge industry that has developed in Queensland in the shallow, water-saturated coals.”

The company sees up to 16.4 Tcf of recoverable gas in its coals. “The source rocks in the Cooper Basin are coals, not shales,” said Wrench. “The reality is that the bulk of the hydrocarbons generated in the Cooper Basin have been generated from deep coals.”

Strike Energy’s tracts are ideally located with direct access to a pipeline that connects to eastern Australian markets. The company has already put together a unique arrangement with Orica, a major mining services firm and industrial consumer. Orica has committed to prepay up to AU$52 million to Strike to help fund project development, in return for gas supply of up to 140 Bcf over a 20-year period. Less than 5% of overall resource was committed to Orica, said Wrench. Strike retains operator status and 66.67% of the PEF 96 permit. “It’s an excellent deal, and the first of its type in eastern Australia.”

Going forward, work is focusing on the PEL 96 permit, where Strike is launching a three-well program. The company plans to confirm gas content, composition and saturation of the Toolachee, Epsilon and Patchawarra coals. It will also assess the porosity, permeability and productivity of the target coals, as well as the potential completion technology. The drilling plan is straightforward: Strike plans to drill slightly deviated wells from a pad to some 2,000 meters total depth. Completions will likely be a couple of stage fracs per seam.

If it enjoys appraisal and development success with this Phase 1 program, Strike will push forward on a much larger development. If all goes well, commercial production is planned for 2016. “We think we should be able to produce gas around $3 per thousand cubic feet,” said Wrench.

“The problem in the Cooper Basin, as in most of the Australian basins, is not resources. There’s plenty of gas,” he said. “The issue is reserves. How does the industry take this very, very large resource base and convert it to reserves in a reasonable time frame?”

That is the challenge, and that is exactly what Strike aims to accomplish.

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