L&M Group subsidiary Coal Seam Gas Ltd has announced it has New Zealand's "first ever independently verified" coal seam (methane) gas reserves at its Ohai coalfield - an estimated potential resource of 173 petajoules of energy.
If proven to be higher by more tests, it could become New Zealand's third largest gas field, with applications across industrial, commercial or residential use.
Coal Seam and listed sister company L&M Petroleum announced in late August the pair were considering a merger and dual listing to raise $A30 million ($NZ36.3 million) to fund an aggressive year-long coal-seam gas exploration programme in Southland.
Coal Seam has drilled 11 test holes at its permitted Otago and Southland areas at Ohai, Winton, Kaitangata and Hawkdun.
Coal Seam chief executive Kent Anson said, when contacted, the resource estimate was undertaken by Colorado-based MHA Petroleum Consultants LLC, and would prompt further drill testing during the next 12 to 18 months to move the estimate from "possible" to "probable".
"Ohai has a considerable amount of data. The emphasis is to push this through to the commercial stage," he said yesterday, but declined to say how much the privately owned company had spent on exploration during the past decade.
Southland and Otago's vast coal and lignite reserves are coming under increasing scrutiny as energy sources, with several multibillion-dollar conversion plants being studied; including lignite to urea fertiliser and lignite to petrochemical applications.
Mr Anson declined to comment on the merger potential with L&M Petroleum and whether part of the $A30 million equity raising could boost Coal Seam's programmes - but it would appear a likely scenario, given both have been targeting coal seam gas.
