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Energy Drilling Australia bets on Australia’s burgeoning CBM industry

Oilfield Technology,

In late 2011, Energy Drilling Australia (EDA), a subsidiary of Ausdrill, took delivery of its second drilling rig and has placed an order for a third, which is expected to be ready for service by mid 2012. With each rig costing approximately AU$10 million – including the purchase price and the cost of modifications to prepare them for use in local conditions – it represents a significant outlay. But, with Australia’s coalbed methane (CBM, known in Australia as coal seam gas) industry booming, it looks a good bet. 

Over recent months the company has won two significant contracts to provide services to the coal seam gas sector. These include:

  • In February 2012, EDA was awarded a contract with Exoma Energy Ltd to provide a drill rig and drilling services for the Galilee Joint Venture 2012 exploration programme. The contract, scheduled to commence in April 2012, is for 12 months with an option to extend another 12 months.
  • In June 2011, EDA entered into a contract with Santos for the provision of CBM production and exploration drilling services, with the works predominantly being undertaken in central-western Queensland. The company has been using its new Foremost Explorer III-65 Drilling Rig to service this contract, which is expected to run for 15 months.

The company’s second rig, a larger-capacity Schramm TXD200, landed in Australia in late 2011 and will be used to service the Exoma contract. The third rig, also a US-built Schramm, should be up and running by July 2012.

EDA’s general manager, Peter Wright, said there was strong demand from the industry for the new drill rigs: “These rigs will be put to use immediately they are available. By mid 2012, I would hope we may need to order another one, and our goal is that by the end of 2013 we will have six rigs operating – all servicing the coal seam gas industry.”

There are a number of energy companies, ranging from major international players to juniors, which are pursuing opportunities with the CBM sector in Queensland and New South Wales. And as Wright explains, CBM requires a lot of drilling: “The three largest companies in the sector have estimated they need to drill 20,000 wells by 2016. The best case scenario is that one rig can complete three wells per month, so that gives you some idea of the magnitude of the opportunity. We know of one company alone that has a requirement for as many as 50 rigs, and currently these rigs are simply not available in Australia,” Wright said.

EDA was formed by Ausdrill in 2009 specifically to pursue opportunities within the coal seam gas industry. “At the outset we were an unknown quantity,” Wright continued. “People were familiar with Ausdrill as a company that provides mineral drilling services, but did not associate us with the energy space. Now our name has got out there, and we are particularly proud of the fact we are seen in the industry as a ‘can do’ company.”

With the wells having an estimated 15 year life, EDA believes there are further opportunities in servicing and maintenance. “Santos was the first coal seam gas contract awarded to EDA, and was a significant milestone in what we see as a high growth market. As we bring our new equipment on stream we will be well placed to continue to grow the business,” Wright conluded.

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