Arrow Energy Fires Up With First Gas From Kogan Creek

Sydney, Jan 24, 2006 (ABN Newswire) - Hello, I’m Nick Davies. I’m Chief Executive of Arrow Energy. I’m here to talk to you today because there’s been a very significant development in Arrow Energy’s history. In the year 2000 Arrow listed on the ASX, and five years later, in January 2006, we’re about to get our first sales gas from the Kogan North field. In fact, today one million cubic feet a day of gas will be going into the Roma to Brisbane pipeline through our central gas processing facility.

This is very significant for us, of course, because it’s our first gas sales revenue, but it’s also very significant for the industry, because this is the first sale of coal seam gas from the Wooloom coal measures and the Surat Basin.

So why is this important? Well, it’s important because it shows that everything works. Although we’ve drilled a lot of exploration wells over the last few years, a lot of appraisal wells, and done a number of pilots that show how the wells perform over a short period of time, there’s nothing like proving that it happens in a full-scale development mode, and today we’ve proved that.

We have 31 wells now producing in the Kogan North field. When we did our pilot we only had four wells producing, and they were about 150-500 metres apart. These 31 wells are over 900 metres apart, and so we have a much larger area to de-water. Proving that that all works is a considerable step forward, because we have a significant area to remove the water from and we’ve been flowing the wells now for over six months. The field’s been de-watering in classical coal seam gas style, and at the same time as the water rate increases, the gas rate has started to increase as well, and now that we have all wells flowing the gas rate is increasing rapidly.

This project is the first in many projects for us, and many of those are in the Surat Basin, and a number of others are in other areas. We have three development projects now: this is the first of those. We have eight further appraisal projects, and our goal, as we publicised for the last year and a half, is to get to 45 petajoules per annum of gross operating production by 2010.

This success on Kogan North is significant for those other projects, because a) it shows that it all works, but b) it proves that, for instance, the Daandine North and Tipton projects, and the Daandine project in particular, which are very, very close to the Kogan North field, and have very similar characteristics, will, we believe, behave the same way during their development phases. The Daandine field, for instance, is just across the road from Kogan North. It’s the same coals, just extending into a different lease, and we already have drilled a number of wells on Daandine and shown that the coals look the same and behave the same as Kogan. So that’s given us a lot of confidence for both of these next two developments.

We believe the company is well on its way to achieving its 45 petajoules per annum target, and we look forward to many more successful developments in the Surat Basin and elsewhere.