Coal-seam gas explorer L and M Petroleum is set to begin its seven-hole test-drilling programme for the year in lower Southland.
L and M Petroleum chief executive John Bay, who estimated in January up to $15 million could be spent on five test wells this year, said in a statement the first test drill, near Ohai, was expected to drill to a depth of 585m over 26 days to test the "deeper, more gas-rich Morley coals" which lie deeper than two earlier test wells undertaken last year in the Beaumont formation.
"The drilling programme is designed to confirm the coal-seam gas potential in the company's onshore western Southland basin permits, which initial analysis indicates may hold up to 300 petajoules of coal-seam gas potential resources," he said.
L and M Petroleum has a 100% stake in three exploration permits, two onshore and one offshore, around western Southland as well as a 50% stake in an onshore Southland permit with joint-venture partner Mighty River Power.
It is still looking for joint-venture partners for oil and gas exploration and has not ruled out the possibility of a joint venture for coal-seam gas exploration in the South.
Mr Bay said after completing the first well, the rig would be moved to drill two wells "back to back" near Mt Linton before a further four wells were drilled in the Takitimu and Longwoods areas in southern Southland.
