Real Energy joint venture gets government go-ahead at Venus
In an extremely important development for Real Energy Corporation (ASX:RLE) the Queensland Government has officially granted title of the Venus Project permit ATP-2051 (previously PLR2019-1-11) to the Strata-X Energy and Real Energy Corporation joint venture (RLE:50%/SXA:50%).
Project Venus is located within the main Walloon coal seam gas (CSG) fairway in the Surat Basin, Queensland.
It is immediately adjacent to gas infrastructure and is prospective for CSG over its entire area of ATP 2051.
A recent independent review of the data within and around the permit certified a Prospective Gas Resource of 658 BCF (694 PJ) gross, 329 BCF (347 PJ) net to Strata-X in the Walloon coal seams in ATP 2051.
Underlining how the joint venture will progress, Real Energy will be the administrative and commercial operator while Strata-X, at least for the initial phase to predictable reserves certification, will be the technical operator.
Aligning with Strata-X appears to be an astute decision by Real Energy as Ron Prefontaine is the executive chairman of the group.
He was the technical director of Arrow Energy and founding managing director of Bow Energy, two ASX-listed CSG companies that were separately taken over in 2010 and 2011, respectively, for a combined total of approximately $4 billion.
Strata-X is engaged in the business of oil and gas exploration and development with a variety of exploration opportunities in Queensland, the States of California and Illinois in the United States of America and the Republic of Botswana.
Previous wells suggest high probability of success
As illustrated below, the Venus Project is adjacent to gas infrastructure, and the JV plans to expedite appraisal and conversion of resources to reserves to fast track development.
There are several previously drilled CSG and conventional wells located within and around ATP-2051, including a fully cored well indicating the upper Walloon coal seams are fully gas saturated.
One of the historic wells in the permit, the Connor-1 well, was drilled immediately adjacent to the core hole, then cased and under-reamed (enlarged beyond the regional drilled size), but it was never properly flow-tested.
The Project Venus JV plans to re-enter the Connor-1 well to reservoir-enhance and flow-test the upper Walloon coals.
The re-entry flow-test program is designed to prove sufficient water flows to allow efficient dewatering and early gas flows from the fully gas saturated upper Walloon coal seams.
The Connor-1 re-entry start date will be announced when the contractors and timing are confirmed.
Assuming the Connor-1 re-entry flow-test goes to plan, the Project Venus JV expects to drill two wells offsetting Connor-1 and fully equip the three wells as a production pilot program.
The pilot program will include long term flow-testing of the upper Walloon coals with the objective to prove commercial gas flows rates.
Once commercial gas flow rates are achieved in the pilot program, the Project Venus JV can commence progressively converting the 658 BCF (694 PJ) Prospective Gas Resource to reserves with the goal to fast track development of the project, thereby offering the potential for early cash flows.