Queensland Gas Asset – Grandis

 

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OVERVIEW

 

In August 2022, Elixir Energy acquired a 100% interest in petroleum exploration permit ATP 2044 in Queensland, via the acquisition of special purpose vehicle EnergyCapture Pty Ltd (now named the Grandis Gas Project).

The Grandis Gas Project covers an area of 1,000 km2 located close to existing gas transmission infrastructure centred on the Wallumbilla gas hub. This hub is connected to domestic and international markets.   In the Grandis area there is easy access to well locations by road.  The Taroom Trough has been an established oil and gas province for many decades.

The Grandis Gas Project has booked an initial contingent resource (2C) of 365 billion standard cubic feet of gas).

Highlights:

  • Drilling by BG Group (now Shell) around a decade ago in the Taroom Trough flowed gas to surface from multiple wells – facilitating this contingent resource booking in Elixir’s adjacent ATP 2044 permit.
  • Independently certified by ERC Equipoise.
  • Fractured coal target not included.
  • The key contingency to be met to move to reserves is to flow at commercial rates.
  • Daydream-2 appraisal well reached Total Depth (TD) of 4,300 on 7 December 2023. The Federal Government will pay for 43.5% of the total cost of the Daydream-2 well through its R&D Tax Incentive mechanism.

GRANDIS GAS PROJECT CONTINGENT RESOURCE

 

On 10 November 2022, Elixir Energy announced the booking of an initial contingent resource for its 100% owned Queensland asset, ATP 2044 Grandis Gas Project.  For further details please refer to the ASX release by clicking here.  No assumptions underpinning the assessment of this resource have changed since the announcement date.

The contingent resources, set out below, have been independently certified by international firm ERC Equipoise Pty Ltd (refer below for further details on ERCE).

ATP 2044 – Grandis Gas Project

Contingent Resources (100% WI)

 UNITS 1C2C3C
Gas Initially In Place (GIIP)BCF2,1287,00722,699
Recoverable GasBCF933951.493
Recoverable CondensateMMbbl0.73.617.3

Note: These are unrisked contingent resources that have not been risked for the chance of development, and that there is no certainty that it will be economically viable to produce any portion of the contingent resources.

Detailed notes on the background to the preparation of the contingent resources report are set out in ASX release Appendix 1 by clicking here.

Elixir has two primary targets in the Grandis Gas Project, namely:

    1. Tight unconventional sandstones.
    2. Fractured thermally mature coals.

ERCE assigns contingent resources to the tight sandstones of the Permian aged Kianga Formation and Back Creek Group only, as these are the origin of the gas flows in nearby wells.  The estimation of the contingent resources is based on the results of previous drilling in the same Taroom Trough play, immediately to the West, North and East of ATP 2044.

The fractured thermal mature coals remain an exploration target and have not been evaluated by ERCE.  Establishing flow rates therefrom is a key objective for Daydream-2 and a success case in Elixir Energy’s view could lead to a material increase in contingent resources in the overall licence area.

Elixir Energy’s technical team analysed drilling, logging and test data from these wells.  Specific analysis including seismic interpretation, core analysis, wireline petrophysics, chromatographic gas analysis, DFIT, production test analysis and gas sampling have all been incorporated in the resource estimations.  ERCE has independently reviewed these interpretations.

Gas and condensate recoveries from nearby wells (*QGC)

The key contingencies of the Grandis Gas Project are the ability to flow gas at sustained commercial rates and the optimum well design.  Elixir Energy is planning an appraisal well, Daydream-2 (expected to be drilled in Q4 2023, subject to rig availability), which will be extensively stimulated and tested in order to prove commercial flow rates.

Elixir Energy plans for drilling Daydream-2 are now under way.  A Project Manager has been appointed, rig companies, other service sector companies and adjacent operators engaged, and the initial scoping and well design have been initiated.  A readily accessible preliminary location for Daydream-2 has been locked in approximately 3 kilometres East of Daydream-1 (which was drilled by BG Group in 2011 and flowed gas at an instantaneous rate of 3.5 MMscfd).

 

About ERCE

ERCE is one of the largest petroleum Reserves and Resources auditors globally. Examples of current public clients include Harbour Energy, Jadestone Energy, Neptune Energy, Gulf Keystone, Tullow, Lundin Petroleum and Internatinoal Petroelum Corporation (IPC). The firm was formed in 2010, when ERC Energy Resource Consultants Ltd (ERC) and Equipoise Solutions Ltd (Equipoise) merged. ERCE employs geoscientists, engineers, petrophysicists and economists, and has an extensive group of senior associates who bring further regional, technical and petroleum economics expertise to projects. ERCE has offices in the UK, Singapore, Kuala Lumpur, Malaysia and Perth, Australia. The work on the contingent resources has been supervised by Mr Adam Becis, Principal Reservoir Engineer of ERCE’s Asia Pacific office, who has over 15 years of experience. He is a member of the Society of Petroleum Engineers and also a member of the Society of Petroleum Evaluation Engineers.

The estimates of contingent resources in the Grandis Gas Project are set out in the table below.  The subclass of Contingent Resource (as defined under the PRMS – illustrated in Appendix 1), is “Development Unclarified”.

TECHNICAL SUMMARY

 

ATP 2044 is prospective for gas and condensate trapped in conventional and unconventional sandstones and fractured coals.  These reservoirs are proven in the Taroom Trough, where the Daydream-1 well, 2km west of the permit edge, flowed gas at rates of up to 3.5 million cubic feet per day.  The primary objective reservoirs are the sandstones and fractured coals of the Permian aged Kianga Formation and Back Creek Group within the Bowen Basin

The tenement is surrounded by much larger oil and gas players.

 

  

DAY DREAM- 2 HIGH IMPACT WELL

The Daydream-2 appraisal well was completed in late 2023. The well was approximately 100 metres deeper than originally planned, as the well continued to demonstrate elevated levels of gas in excess of pre-drill estimates. The deeper TD also allows for greater operational flexibility in relation to the next few phases of the Company’s appraisal plans for the well. During the course of drilling the final 100 metres of the well, a rapid increase in the rate of well penetration (“drill break”) was encountered. This drilling break was associated with a gas influx from the formation into the well bore. Using drilling best practice, this gas influx was circulated out of the well to the rig’s flare.

The volume of gas flared was estimated at the wellsite to be approximately 50,000 cubic feet. As a result of the influx, the drilling fluid was “weighted up” and the well safely and successfully drilled to a TD of 4,300 metres. To encounter a permeable reservoir section this deep in the well provides significant upside.

Substantial further work is required to truly establish the implications of this discovery, but these could be materially positive. – if successful will facilitate reserves and increased contingent resource bookings.

 

An address dominated by much larger IOCs

 

 

Daydream-2

Daydream-2 drill rig 

 

OPERATE ALL YEAR ROUND

 

High impact well, Daydream-2 is planned for around the end of 2023 subject to coordination with drilling contactor(s) and other operator(s).  There are no expected weather windows to negotiate with and rig access will be almost wholly by sealed road.

 

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