STX 8.33% 26.0¢ strike energy limited

Well the only way they are not completely wet is if there is...

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    Well the only way they are not completely wet is if there is free gas in there. Then it behaves more like a conventional reservoir where you have a certain percentage of water and a certain percentage of free gas. But the company already said they saw no sign of free gas, only the hydrocarbons that flowed back in the nitrogen flood. Keep in mind that nitrogen adsorbs more strongly to coal than methane, so if you flow nitrogen into coals, the nitrogen molecule "pushes in" to the adsorption site and bumps the methane molecule off, which is then released as gas. So that's probably where the hydrocarbons came from.

    This is going to get a bit technical, but here we go...

    Whether a CSG well flows a lot or a little bit of water is not related to how 'wet' the coal is, it's related to the permeability, or specifically the transmissivity, which is equal to the perm times the thickness. In these coals we have fairly low perm but very high thickness so the transmissivity is fairly high. But nowhere near as high as Qld CSG sweet spot wells, so after the frac cleanup is finished and it's flowing at a steady state, they will probably get less than 1000 barrels of water a day I would think.

    But flow rate isn't the issue, the issue is the volume of water you need to shift to dewater the well sufficiently much to establish commercial gas flows. And that is dependent on the volume of water in the coal seam (which is large here because of the thick coals) and the gas content and gas saturation of the coal (which determines how much water you need to shift before you reach the pressure at which the coals start desorbing gas).

    I don't know the saturation but STX said it is high. But the actual gas content is not very high - the number I backed out from STX's presentation was 8m3/t, which is about what I'd expect for coal of that rank and composition (gas capacity generally goes up with rank, these are low rank, so they have low gas capacity). This means the water-gas ratio is quite high, ie you have to produce a larger amount of water to get a certain volume of gas out. It's not as high as the Surat CSG fields, but it's much higher than say, DW's previous gig at Moranbah with CH4, where water is a fairly small issue (if they had a well that produced 100 barrels a day they would have been calling it a gusher!).

    So the upshot of all this is they are still probably going to have to shift a lot of water to dewater the seam enough to get commercial gas flows, and at 25mD that will take a while. So even though the flow rate per day might not be much, they will have to pump a long time (or from multiple wells). The good news for STX is that the coals are so thick that they don't actually NEED to dewater the seam completely, or anywhere close to it, to get an economic volume of gas. They only need about 2-3 bcf out of the 14 bcf GIP. But a little bit of water from a hell of a lot of coal is still a pretty large amount of water.

    That's my current best understanding of the situation. Of course you guys who are saying that the facts aren't all in yet, are completely right - and I reserve the right to revise my interpretation in light of new evidence.
 
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