Wellington-headquartered Austral said the second production test of the Cheal-B3 well had started during the weekend, following the initial 10-day production test that produced an average 434 barrels of oil per day (bopd) and 283,000 cubic feet of gas per day. The well had been choked back throughout the test to maintain a maximum flow rate of about 500bopd.

Jet pumping of the Cheal-B1 well for 11 days produced an average of 126bopd of crude, 262,000cfd of gas, and seven barrels of formation water per day. That well is now shut-in for a pressure build-up test.

Jet pumping of Cheal-B2 for 14 days produced an average of 159bopd of crude, 96,000cfd of gas, and one barrel of water per day.

Austral said workovers of the Cheal-A3 and A4 wells, plus a re-entry and completion of the A2 well as a possible water injector, were scheduled for mid-April.

The steel tubing in the A3 and A4 wells would be replaced with chrome tubing, and the jet pump set closer to the Miocene-aged Mount Messenger producing formation in order to improve the efficiency of jet pumping operations.

Company chief executive Rick Webber said Austral and TAG would drill the Cheal-A5 and A6 wells once construction of the production facilities had been completed. Austral expected to spud these wells in mid-June and to tie them into the new production facilities as soon as they were completed.

He said construction of the Cheal production facilities at the A wellsite was progressing well, with the main pipe racks and electrical control house now installed, along with one of the main coolers. Detailed engineering design on the pipelines connecting the A and B sites was nearly complete and the pipeline construction contract had been let.

The gas sales agreement was nearly complete, while negotiations to secure arrangements for the long-term transportation, storage and sale of crude production was continuing.

“We are pleased with the results of the well testing, particularly so in regard to the B3 well,” Webber said.

“The better weather we are experiencing has led to an acceleration of progress on the construction of the production facilities and we expect the plant to be commissioned in May, with full production of about 1900 barrels per day of oil available in July."

Austral (69.5%) and TAG (30.5%) are spending about $NZ25 million ($A22.25 million) developing the Cheal field in mining licence in PMP 38156.

Austral also said Crown Minerals had awarded it PEP 38524 in the southern offshore Taranaki Basin. Austral operates and holds a 100% interest in the new exploration licence.

PEP 38524 is located immediately west and north of D’Urville Island, near the northern tip of the South Island, and covers an area of 2187 square kilometres.

Austral’s work program requires it to undertake seismic reprocessing, acquire aeromagnetic data, and complete either a 2D or 3D seismic survey by April 2008.