Floods Hit Australian CBM Players

Flooding in Queensland has forced at least two coalbed methane outfits working in the Surat basin to halt operations.

"To a large extent the roads are impassable - you can't move logistics in or out of the area to sustain businesses," David Breeze, general manager of the Surat Basin Corporation, told Reuters.

"The oil and gas industry operates in difficult areas, off the main highways where there are only gravel tracks so most of the oil companies had stopped operations at this time," he added.

He said drilling companies Easternwell Group and Savanna Energy had ceased operations in Queensland's Surat basin, in the state's south-west.

Two rigs operated by Calgary-based Savanna have been marooned by floods. Savanna said one of the units, worth about $6 million, is believed to have been severely damaged.

The company is drilling CBM wells for Australia Pacific Liquefied Natural Gas, a joint venture between Australia’s Origin Energy and US supermajor ConocoPhillips. The $25 billion project will connect the wells by pipeline to a new LNG plant at the port city of Gladstone.

Origin spokesman Tim Scott told Reuters the company shut in about a dozen production wells of the 300 it operates in the Surat and Bowen basins.

"All of our (CBM) exploration activities are on hold at the moment," he said, addding he did not foresee any delay to the construction of the company's export project and there had been no material impact so far.

Santos and BG Group said that so far the floods have had a minimal impact on operations.