Now listed on the ASX after raising $9 million in an IPO, Purus intends to explore and commercialise CBM for the southeastern Australian gas market. It has already held initial discussions with natural gas wholesalers, which have shown their interest in buying gas from the company.

Purus intends to drill four slim core holes to depths of around 1000m in the Casterton and Warrnambool areas to sample seams in the Killara Coal Measures already identified from detailed research of the region. A series of petroleum exploration wells drilled over the last few decades have already confirmed the existence of natural gas in the area.

The core samples will be examined for porosity, permeability and gas content, then subjected to gas desorption testing so Purus can select the location for two five-spot field production pilot programs beginning early in 2006.

Commercial quantities of CBM could be brought to the market through the extensive network of natural gas pipelines in south-west Victoria, including the recently completed SEA Gas trunk pipeline from Port Campbell to Adelaide, which runs right through the permit areas.

Since forming in 2002, the company has analysed petroleum, seismic, mineral and water data from previous explorations in the areas now covered by its blocks. Purus has now taken up 10,196 square kilometres of tenements and applications stretching along the northern margin of the Otway Basin from Casterton in the west to Colac in the east, reaching down to Warrnambool in the south.

In this acreage, Purus holds 100% of the rights to explore for CBM over 8,782 square kilometers and has a priority interest in exploration licence applications covering the remaining area.

Purus is targeting the Killara coals at depths of between 650m and 1000m below the surface. They are contained within the Lower Cretaceous-age Eumeralla Formation and range in rank from sub-bituminous to highly volatile. The Killara Coal Measures are stratigraphically equivalent to the gaseous Wonthaggi Formation coals mined in the south Gippsland Basin of western Victoria.

With a seed capital of $2 million, the company undertook three years of research and evaluation of more than 85 wells drilled for oil, gas and water in the Otway region. It also analysed seismic surveys and correlated the interpretations with the wells to select six specific areas for further attention. The company’s initial exploration and development is to be staged over the next two years.

Analysis of five of these areas from the existing exploration data shows them to have methane gas-bearing coal seams, according to Purus. But further exploration could identify additional target areas.

Two of the six project areas, called the Gordon Project and the Hawkesdale Project near Casterton and Warrnambool respectively, are the subject of the forthcoming October drilling. The key data points influencing this selection were Santos’ Gordon-1 petroleum exploration well drilled in 1997 and the much older Hawkesdale-1 well drilled by the Frome-Broken Hill group back in 1969.

Purus is initially concentrating on coals more than 1.5m thick. Logs from Gordon-1 indicated a number of coal seams, one of which was 2.5m thick. Hawkesdale-1 intersected eight seams, most of them less than 1m thick, although one had a thickness of 4.5m.

The four other selected areas – Mocamboro and Digby near Casterton and Stoneyford and Nalangil near Colac – will be looked at more closely next year when Purus hopes to have joint venture partners for the program.

If the initial drilling is successful, Purus plans to establish a trial gas field to determine the commercial viability of gas production through assessment of gas flow rates and other production parameters. Depending on the results, the board then plans to commission a bank feasibility study for the full production and development of one CBM area, which could involve raising additional funds.

Mitchell Drilling Contractors has taken shares in Purus in lieu of cash for the first $1 million worth of drilling and Nathan Mitchell of Mitchell Drilling has joined the Purus Board as a non-exectutive director. Mitchell specialises in drilling coalbed methane wells, having working on CBM projects for BHP Billiton, CH4, Origin Energy, Santos and others.

Also on the Purus board as operations director is geologist Roger Blake. Blake is a founder and former exploration director of Melbourne junior oil and gas explorer Essential Petroleum, where he managed the technical and operational aspects of the company’s exploration effort in the onshore Otway Basin.

Exploration manager is coal geologist Brian Cuffley who conducted much of the initial research in the tenement areas.

The company’s managing director is Richard Sandner, the current president of the Minerals Council of Australia (Victoria division) and chairman of unlisted public company Penshurst Resources. He was also the former managing director of Bendigo Mining and Reef Mining.