L&M Energy is targeting early August to hook up its coal seam gas pilot programme to a 1MW generator near Ohai in Southland.
L&M Energy (LME) has linked two wells within coal deposits in recent lateral (horizontal) drilling programmes.
Two adjacent exploration wells would now be redrilled for production and added to power the generator, managing director Kent Anson said yesterday.
"Essentially, it's adding more straws into the [coal seam gas] reservoir," Mr Anson said.
He said LME had achieved the first in-coal-seam lateral drilling operation in New Zealand and the initial pressure connection between the lateral and production well had been achieved.
LME is fully funded for its extensive 2011 work programme, which includes drilling onshore at Taranaki sites, reprocessing offshore Taranaki seismic data and further exploration near Kaitangata.
The company had $7.3 million cash in hand at the quarter ended March.
Mr Anson said the 1MW generator had arrived in Invercargill and was undergoing pre-delivery work before being taken to the project site for commissioning. Gas to run the generator was predicted to be available by early August.
Mr Anson said the connection to the existing adjacent electricity network was proceeding as planned.
A connection agreement with the local electricity network company had been signed, and site preparation plans completed.
In October last year, LME's estimated gas reserves were upgraded almost 60% from 173 petajoules of energy to 274 petajoules, in an independent report.
