Successful
development of coal seam gas (CSG) resources in low-rank coalfields such as the
Powder River
Basin has raised interest in CSG from low rank coal in
New
Zealand. Kenham Holdings Limited holds 12
Petroleum Exploration Permits (PEP) covering some of New Zealand's low-rank coal
and lignite resources and has engaged CRL Energy Limited to assist in the
systematic evaluation of the CSG potential of the permits. To date, exploration
results from seven New
Zealand coalfields reflect differences in coal
type, rank, depositional environment and depth of burial between coalfields.
Several of the explored coalfields are considered prospective for CSG. One of
the most advanced Kenham exploration programmes is in the Hawkdun Coalfield,
Central Otago.

The Hawkdun
Coalfield contains a single, thick lignite seam with properties that are similar
to the Powder
River Basin. Preliminary
results indicate the Hawkdun Coalfield is prospective for CSG with the potential
to contain between 25 and 60 PJ of gas; enough to supply a 30MW power station
for ten to 25 years. Further drilling is planned to investigate the economic
viability of the Hawkdun Coalfield. The in situ permeability of the lignite, the
amount and availability of free gas, gas saturation at depth and market
opportunities will determine its economic viability. If initial pumping and
production results in the planned exploration programme are promising, the
Hawkdun Coalfield will be further developed with additional production
drillholes to form a trial production pod.