Icon Energy (ICN) has recorded good permeability results at its Lydia No 8 well, located 5 kms east of the Lydia Pilot within ATP 626P in eastern Australia.

In conjunction with our joint venture partner, Queensland State Government-owned Stanwell Corporation, Icon decided to drill four additional wells within the Lydia Pilot farmin area. With respect to the operations in the 100% Icon Energy owned area, Icon Managing Director, Mr Ray James said that Lydia No 8 had been drilled to a total depth of 841 metres, penetrating a coal sequence of 13.0 metres, which is similar in thickness to the original Lydia Pilot.

'Logs were run in the well and drill stem test (DST) No. 1 over the interval of 781 to 807 was run. When the DST tool was opened, well head pressures of 225 psi were recorded and a water flow rate of 935 barrels of water per day were estimated. The over pressure encountered augers well for water and gas production as it indicates good permeability. We are now proceeding to further tests higher in the well.

'This flow rate from the Taroom coals indicates excellent permeability well within the commercial range'.

'These DST results will now require further detailed analysis to confirm the estimates, but there is no doubting their initial quality and the confirmation in DST No. 2 Lydia No. 8 appears to have discovered a sweet spot with good permeability' he said.

Following the drilling of the Lydia Pilot during 2009, Icon's partner Stanwell Corporation required a progress report in order to proceed to Stage II approval under the farmin agreement.

'We took the decision to drill these four additional wells in the Lydia Farmin area before finalising that report and submitting it to Stanwell,' he said. 'This is in addition to the other wells in the areas outside the farmin area. The results so far have borne out that the decision was the right move'. Mr James said that in order to convert Icon's now established certified 6100 PJ of Gas Initially In Place (GIIP) and/or the certified resource estimates of 1115PJ of 2C and 1775PJ of 3C resource to proven reserves, it was necessary to determine flow rates of either water or gas from the coal section of the wells.

'The Lydia Pilot has been on production for four months now and water flow rates average about 300 barrels of water per day,' Mr James said.

'This rate has been constant now for a couple of months and indicates the permeability will sustain production although on the low side of initial expectations'.

'The wells will eventually produce gas for a long time but at low rates. We will continue pumping the wells until we see the gas breakout that is required for sustained production of gas.' he said.

Samples from the new wells are being desorbed in the laboratory, a process which will take some months to reach a result.

'NSAI (reserve certifiers Netherland, Sewell & Associates, Inc.) estimate commercial gas or water production to be in the range of 200,000-250,000 cuft/day or 300-500 BWPD,' he said.

Tags: Icon Energy