NZ Gas Exploration: Coal Seam Gas Prospects Beckon
February 23rd, 2010
L&M Energy, planning a merger with private sister company L&M Coal Seam Gas, could become NZ’s biggest coal seam gas explorer with 12 exploration permits and a market capital value of more than $100m. An independent report has valued LMCSG at about $118m, based one 173PJ 3P coal gas reserve at Ohai, Southland. The 3P classification means there is an estimated 10% chance of recovering the 173PJ of gas.
LME CEO John Bay says if the merger is approved, the company will aim to expand 3P reserves and certify its first 2P reserve in Southland this year. A 2P classification signifies an estimated 50% chance of recovery. It could be the basis for LME to initiate supply contractors. Potential customers could include Fonterra and Rio Tinto’s aluminium smelter at Tiwai Point. LMCSG’s Kent Anson hopes LME might be producing gas commercially in 2012 if the merger goes ahead. Cheaper gas could replace lignite, coal and wood as industrial fuel. Shareholders are due to vote on the merger proposal on February 22.
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