Omega spuds horizontal well as it hunts Australia’s next major discovery in Queensland’s Taroom Trough

Energy junior Omega Oil and Gas has begun a major drill program to assess what could be Australia’s next great gas province.

Omega has begun a significant drill program looking for a major bounty of economic gas on Australia’s east coast. Pic via Getty Images.

• Fresh off a nearby gas discovery by multinational giant Shell, Omega has spudded a horizontal well at the Canyon gas project in Queensland’s Taroom Trough

• Horizontal well will penetrate up to 1100m of the Permian Canyon Sandstone to establish the potential for economic gas flow rates

• Contains 2C contingent gas resource of 1.73Tcf and 3C contingent gas resource of 4.5Tcf

Special Report: One of the closest watched onshore oil and gas exploration campaigns in the Australian east coast market has kicked off, with Omega Oil and Gas spudding its Canyon-1H well in Queensland’s Taroom Trough.

Omega Oil and Gas (ASX:OMA) commenced operations to re-enter the existing Canyon-1 vertical well and drill a new horizontal well section on Saturday September 21.  At around 3450m deep a new horizontal well section up to 1100m long will be drilled into the Permian Canyon Sandstone to test for gas flows at the project, some 140km south-east of the Wallumbilla gas hub near Brisbane.

It’s not far from a well where Shell set tongues wagging with a well flare earlier this month, which has trained eyes on the Taroom as a potentially significant source of gas for the soon to be woefully undersupplied east coast.

Already trillions of cubic feet of prospective gas resources have been identified by Omega, Shell and other regional players like Elixir Energy (ASX:EXR) in low permeability, basin-centred gas accumulations of the Taroom Trough. Santos (ASX:STO) is another energy giant in the vicinity.

Omega is testing the flow potential from identified contingent gas resources in their exploration area of 0.5, 1.7 and 4.5Tcf estimated in the 1C, 2C and 3C categories.

The 2C resource consists of 1.51Tcf of gas and 68.6 million barrels of condensate, with a recent two well drill program returning thick intercepts of hyrdrocarbons within the targeted, overpressured Kianga formation.

The drilling program is expected to take 3-4 weeks to complete.

Ensign Rig #965 has set up camp to drill Canyon-1H. Pic: OMA

Urgently needed

A delegate of Queensland Resources Minister Scott Stewart declared Potential Commercial Areas 342 and 343 covering Omega’s Taroom ground in July, giving OMA security of tenure at the 100% owned Canyon project for 15 years.

Omega CEO and MD Trevor Brown said the well, if successful, could play a major role in shoring up gas supplies for the east coast, where a lack of new development and ageing historic assets in the Bass Strait have market watchers and regulators concerned about shortages in the not too distant future.

Gas prices have averaged a hefty $14/GJ over the past three years even before the worst of the supply deficits emerge, which the Australian Energy Market Operator thinks will become persistent from 2027.

“Omega is pleased to announce that following successfully moving Ensign Rig #965 to the Canyon location, the Canyon-1H well was spudded on 21 September 2024,” Brown said.

“The well plan is to re-enter the existing Canyon-1 vertical well and drill a horizontal well section up to 1100m long into the Permian Canyon Sandstone.

“The Canyon-1H horizontal well aims to test whether a potentially economic flow rate can be achieved from the highly prospective, Permian tight gas sands within the Taroom Trough in Southern Queensland.

“The Permian reservoirs are known to contain vast volumes of gas. If the Canyon-1H well is successful, Omega will have taken a big step toward commercialising urgently needed, significant new gas supplies for Eastern Australia.

“The Omega team, the Ensign rig crew, and Halliburton’s Drilling Services teams are well-prepared for the program and are pleased to commence this important phase of the Canyon Gas Project.”

Omega, which is using an experienced drill crew that just completed work on a nearby Shell well, recently raised $6.5m.

It is seeking to be among the first movers to apply the techniques that have revolutionised the US gas industry, shifting from vertical to horizontal wells, in the Bowen Basin.

While Omega currently has a market cap of $83m, some big names are backing it to the hilt, including the family office of energy rich-lister Brian Flannery, which holds a 29% stake, and coal seam gas pioneers Tri-Star Group (20%).

This article was developed in collaboration with Omega Oil and Gas, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Omega spuds horizontal well as it hunts Australia’s next major discovery in Queensland’s Taroom Trough