Big Boost for Oz Mahalo Gas
After weeks of steady increases in gas flow rates, the Mahalo Gas Project in Queensland, Australia, has been given a substantial reserves upgrade, project operator Comet Ridge said March 6.
CEO Tor McCaul said Comet’s 40% share of 2P reserves has increased by 473% from 30 petajoules to 172 PJ while its share of 3P reserves rose 71% to 374 PJ following the completion of the 2017 work program.
“Importantly, Comet Ridge’s share of maiden 1P reserves of 18 PJ has been certified for Mahalo due to the exceptional performance of the Mahalo and Mira horizontal pilot wells, enabling commercial thresholds to be met,” he said.
The update takes the current reserves certification for 100% of the project for 2P reserves to 430 PJ, which exceeds the target by 29% and enables Comet to cash call Santos for A$1.348mn (representing 30% of the 2017 work program cost of A$4.5mn), Comet said.
Santos and Australia Pacific LNG (APLNG) each have 30% interest in Mahalo.
RBC Capital Markets analyst Ben Wilson said: “Under the agency agreement with Santos whereby Comet is operating the current exploration and appraisal program Comet has carried Santos through its [roughly] A$1.3mn (30%) of the 2017 work program. This A$1.3mn is now reimbursable to Comet as the Mahalo project has booked over 334PJ 2P reserves and is the trigger for Santos to start paying its 30% share of future exploration and appraisal costs”.
The Mahalo block is about 240 km west of the Port of Gladstone, where the APLNG terminal and Santos’ Gladstone LNG terminal are, and handy for pipeline connections.
McCaul said the upgrade was an important milestone: “As the Mahalo project moves closer towards a development decision, additional focus will be placed within the 2018 work program on building 1P and 2P reserves as further production data is collected and additional appraisal is undertaken." The increase in 3P reserves is also important as it enables the joint venture to consider a larger scale development than previous thought, he said.