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Rosella drilling plans

  • Metgasco is pleased to advise that the Rosella well will be drilled in April, 2014.
    • It will test a large geological structure, potentially confirming a gas resource significant to NSW.
    • It is exploring for conventional gas, not CSG (no water production).
  • All environmental approvals are in place.
    • Richmond Valley Council is monitoring water bore quality before and after.
  • We have a land access agreement with the landowner.
  • Atlas Rig 3 has been contracted. Its arrival on site depends on completion of the well it is currently drilling in Queensland.
  • We will not be fracking during this program.
  • This program will be approximately 45 days.
  • We are working hard to minimise any traffic delays and apologise if there is any inconvenience to the public.

Rosella Q&A’s

Q:  What is the Rosella exploration well and what type of gas is Metgasco exploring for?

The Rosella well is testing for gas in conventional and tight gas rocks – we are not testing for coal seam gas.  

We drill a vertical well and measure the properties of the rocks we drill through, including the amount of water and gas in the rocks.  This gives us information to determine whether a commercial field development is possible.  We might need to drill a number of exploration wells before there is sufficient information to be confident of a commercial field development.

Q:  Where is the Rosella exploration well? What is the current land use on the drill site?

The Rosella exploration well will be drilled on an unused gravel quarry on the Kyogle/Bentley Road, about 15 km from Lismore.

Q:  Why has Metgasco chosen that particular site?

Analysis of geological models and seismic data has indicated that this site is in a good position on the top of a sandstone structure where we hope to find commercial quantities of gas.  The landholder is also supportive and has signed an agreement with Metgasco to grant us access to drill an exploration well on his property.

Q:  What type of agreement do you have with the local landholder?

We have an access agreement with the landholder that gives us the right to use a section of land, the quarry, for our drilling.  The agreement was voluntary.  The landholder is compensated for the use of his land.  We must fully rehabilitate the area when we finish our activity and get the landholder’s endorsement of our rehabilitation before Government inspects the site and bonds are returned to Metgasco.

Q:  What previous work has Metgasco done in the Northern Rivers area?

Metgasco has operated in the Casino area for close to 10 years and has drilled more than 50 wells, without a reportable environmental incident.  We have had over 300 voluntary land access agreements for these wells and the seismic data we have acquired.

Q:  What Government approval processes has Metgasco gone through in order to proceed with the Rosella natural gas exploration well at Bentley?

Firstly, we had to obtain an exploration licence from the Government.  This licence requires us to carry out a certain amount of exploration activity each year (e.g. drill a well).  It gives us exclusive rights to explore in the area and the right to apply for a production licence if we are successful in finding commercial quantities of gas.  As part of the exploration licence approval process, we must comply with the terms of the NSW Petroleum (Onshore) Act and a range of other acts, codes and conditions specific to the licence.  The NSW Government maintains a website with information about the industry and its regulation:

http://www.csg.nsw.gov.au/

For each exploration activity, we need to make an environmental submission and get government approval for our proposed activity.  The environmental submission is called a Review of Environmental Factors, or a REF.  It is essentially an environmental impact statement appropriate for a short term drilling or exploration activity.  The REF for the Rosella well has been approved.

Q:  Where can I find the approved REF?

The approved REF can be found on the New South Wales Department of Trade and Investment Website:

http://www.resources.nsw.gov.au/environment/overview/ref/search?

Q:  Why is an exploration well drilled and what is likely to be discovered?

An exploration well is drilled to examine the properties of rock layers below the ground and whether the different layers of rock are filled with oil, water or gas.

Before the well is drilled, the geologist will do his best to predict what we will find. In the case of Rosella, our geological studies and previous drilling in the area suggests that we little chance of finding oil and if we find gas it will be like the gas in the Kingfisher well, almost entirely methane.  Until we drill the well we cannot be sure if the rocks will be exactly as we expect or if the pores in the rock will be filled with gas or water.

Q:  What happens during the exploration drilling process?

A drilling rig is taken to the site and then drilling begins, just like a water bore, except that the well is a larger diameter (eg; 200mm) and we drill a lot deeper.

As the well is drilled, successive layers of steel and cement are put in place to isolate the well bore from the surrounding rocks.  The rock cuttings from the drilling are inspected regularly under a microscope to determine the type of rock and detailed records are kept.  Sometimes there is an indication of gas or oil as part of this process, but this information is only an indication, not always a reliable measure.

When the well is drilled to the bottom, in this case to 2,100m, a series of measuring tools called wireline logs are lowered down the well on a wire to measure rock properties.  We get a lot of information from this, including the type of rock (e.g. sandstone, limestone, coal or shale), the density of the rock and whether the rock contains water or gas.  Sometimes we also get a general indication of whether the rock is likely to flow gas at good rates.  We might then run another tool on the wireline that allows us to measure pressure in the rocks and take small samples of the gas.

At this stage we often don’t have a reliable indication of the gas flow from the well.  To get this information we sometimes conduct what we call a drill stem test.  This is a means of allowing gas from the rock to flow in a controlled manner up the drill pipe to surface, where the pressures, flow rates and gas quality are measured.  The drill stem test is usually only conducted for 24 hours, with the gas flared.  Sometimes two or three different rock zones are tested in this manner.  In the case of Rosella we have approval to test for three days.

Q:  Will water be impacted?

Ground water will not be impacted: the steel pipe and cement installed in the well will isolate the well from the surrounding rock formations, and the water in those formations.

Despite the very low risk, Richmond Valley Council is taking water samples from local water bores and water systems before and after the well is drilled and will provide the results to the community.

Q:  Will chemicals be used?

Yes, we will use a range of different chemicals in the “mud” we use to drill the well.  One of the main chemicals we use is barite, which is the same clay farmers use for their dam linings.  We also use potassium chloride, which is a popular fertiliser.  The chemicals we propose to use are all specified in the Review of Environmental Factors, along with their respective data sheets.  Actual use will be documented and provided to Government.  

The drilling mud is used to manage pressure in the well, lift the rock cuttings from the wellbore as the well is being drilled, and to cool the drill bit.  This approach has been used safely for more than 50 years in Australia and around the world for exploration and production drilling in millions of wells.

Chemicals are stored in a bunded facility on site.  No chemicals will be discharged on site

Q:  Will this exploration well be fracked?

No, this is purely an exploration well and we do not have approval to frac.  If at a later stage we wish to frac this well or any other, we will need to prepare the appropriate engineering and geological work, seek government approvals and consult with the community. 

Q:  What happens if you want to flow test the well for longer than 3 days?

We will have to seek further approval from the NSW Government.

Q:  What happens if the well does not find commercial quantities of gas?

 If the well does not show promise for further exploration or development, it will be fully decommissioned and the site will be rehabilitated.

Q:  What happens if the well is successful in finding commercial quantities of gas?

Metgasco will proceed in parallel to:

  1. get gas supplies to local industries such as Richmond Dairies as fast as possible; and
  2. further define the commerciality of the gas field so that a larger development can be considered.

Richmond Dairies

To get gas supplies to the Dairies and other industries from the Rosella well, it will need government approvals to do so. It current approvals are solely for Rosella as an exploration well, not as a long term gas producer.  The environmental and development approvals and consultation steps required will mean that gas sales will not occur for at least 18 months.

Larger development

The Rosella well will probably not provide all the information that is required for a larger field development.  We will probably need to drill more exploration (or appraisal) wells and acquire more seismic to better define what the field’s size and characteristics before we complete development and environmental management plans, consult with the community and seek the necessary approvals.  It is unlikely that any gas production from a larger field development could start earlier than four years.

Q:  What will Metgasco do with waste generated on site?

All waste, including sewage, is being collected and removed from the site.  It will be disposed in a registered waste disposal facility.

Employment

Q:  How many people will be employed on the site for the exploration process?

We expect to have between 12 and 20 people on site during any single shift.

Q:  What types of workers will be employed?

People on site will include Metgasco’s drilling supervisor, the drilling rig supervisor and drilling crew, a mud engineer, Metgasco’s well site geologist and a safety manager.  From time to time there will also be specialists such as the people who provide specialist technical services that define rock properties. 

Q: Will this project create local jobs and help the local economy?

This is a single exploration well.  It will not provide direct, ongoing jobs in the area.  However, if the well is successful and we move into the development and production phase, Metgasco will need to recruit operating, maintenance and support personnel in the area and there will be a need for drilling and service companies to employ people. There will be the flow-on effect to other businesses.  In addition, a lower cost energy supply in the area could make other businesses more secure and may help to attract new business.

Please click on PDF icon above to view our community presentation.

CONTACT US

North Sydney Office
Level 3, 2 Elizabeth Plaza
North Sydney NSW 2060

Tel: +61 2 9923 9100
Fax: +61 2 9959 5387

Metgasco Ltd  ACN 088 196 383