NSW CSG

exploration Core hole drilling

& pilot testing FACTSHEET
Version 2 March 2012

Pilot Well Design

Pilot well design follows the same
principles as core hole design for
construction of the hole. There are
one, three or five wells for each pilot
test. They are more closely spaced than
production wells, which allows data
to be gathered more quickly. Water
pumped from the coal seam is tested
for volumes and quality, allowing
appropriate water reuse options to be
identified. If gas is produced it is also
extracted and tested.

Pilot testing well site equipment.

Well site equipment

The well is lined with pressure-rated
steel production casing from the
surface to just above the coal seams
and cemented in place. The casing is
pressure tested to ensure that it can
tolerate higher pressures than the
pressures expected over the life of
the well.
A BOP is installed to ensure that the
drilling rig can shut the well in the
unlikely event that unexpected water or
gas pressures are encountered.
At surface level, a wellhead is installed.
It ensures that all produced water and
gas is safely handled. Inside the well
Santos Ltd March 2012

head is a steel tubing hanger the

tubing hangs inside the steel casing
with the pump at the bottom.
The test string (all components of the
pumping mechanism) comprises a
progressive cavity pump (PCP), a rod
string which rotates inside the tubing
and transmits power from the motor
at the well head to the downhole
PCP, which is just above the coals of
interest. This pump lifts water from the
coal seam to the surface.
Just below the PCP is the torque
anchor, which fits against the inside
of the casing. The anchor prevents the
tubing from being twisted out of place
by the constant rotation of the sucker
rod. Below the anchor is the tailpipe
and pump intake. It is designed to
assist with downhole separation of
gas and water, and prevents gas being
pulled through the pump. The lighter
gas rises between the tubing and the
steel casing, while the heavier water
falls to the bottom of the well and is
pumped up inside the tubing string by
the PCP.
The well head equipment performs all
functions required to carry water from
the coal seam to the surface and is
powered by a drivehead. The drivehead
is a motor and pulley system which
drives the rod string and the PCP. There
are four outlets on the well head, two
tubing outlets to carry water from the
well to allow water testing and two
casing annulus outlets to flow gas from
the well to the flare line.
The stuffing box provides a seal
between the rotating rod string and
atmosphere. This prevents water and
gas leaking from the wellhead. During
the pilot test, pressures and water
volumes will be monitored by a flow
meter, reported in accordance with
regulatory obligations.

Gas Management

CORE HOLE DRILLING

Site Identification

All produced water will run through a

separator and any gas will be diverted
to a flare line, or used to power
equipment on site. Flaring is sometimes
done to safely dispose of gas.

Basic Principles

Before landholders are approached,

potential core hole sites are identified
in places that are geologically optimal,
easy to access and where drilling will
have the lowest possible environmental
impact. Sites are generally flat, cleared,
at least a kilometre away from houses
and over 250m from watercourses.

Water Management
CSG water contains mainly sodium
chloride, sodium bicarbonate and
traces of other compounds. During
pilot testing, water samples are
routinely analysed. Negligible
quantities of heavy metals have been
found in coal seam water at Santos
operations. For more information
on water management during pilot
testing, please see Santos Water
Management Factsheet.

During the exploration phase of a

project, Santos drills exploration
core holes to identify where certain
formations are present and at what
depths. Of particular interest are the
quantity, quality and depth of coal in
the region, as well as its gas content,
gas composition and permeability.
Before an exploration core hole can
be drilled, a Review of Environmental
Factors (REF) document is submitted
to the Office of Resource and Energy,
an office within the NSW Department
of Trade & Investment (DR&E)
(formerly the DPI) for approval. The
REF outlines how Santos will minimise
the environmental impact of core
hole drilling activities. Environmental
legislation and compliance is explained
in more detail in the CSG Regulation in
NSW Factsheet.

Land Access
Santos has been working with
Australian landholders for over fifty
years and considers them one of our
most important project partners.
Land access for CSG exploration
activities in NSW is regulated by the
Petroleum (Onshore) Act 1991 (the
Petroleum Act). Land access involves
a negotiation between the landholder
and Santos, with the aim of achieving
an agreement that minimises land
disturbance and manages all identified
risks.

CONTACT US

After the landholder has had time

to read the letter and attachments,
a meeting (in a location nominated
by the landholder) will be arranged
by Santos. The landholder is able to
ask questions about the exploration
drilling process. Suitable and
unsuitable access times (for example,
harvest or calving), access to the
drill site, operations that will be
permitted, environmental protection,
compensation, conditions of entry and
the code of conduct for people on site
will also be discussed.
At this meeting, the landholder
will be given a copy of Santos land
access agreement. Santos strongly
recommends landholders discuss
the land access agreement with their
solicitor, as well as discussing land
access with other landholders with
whom Santos has worked. Santos
pays up to $1500 towards the cost of
landholders legal advice.

For more information

contact:
The Santos NSW CSG Team
PO Box 1025
Gunnedah, NSW, 2380
Free call: 1800 071 278
Email: Energy.NSW@santos.com
or visit the Santos website
www.santos.com/nswcsg

An aerial view of a typical Santos CSG exploration drill site.

GUNNAD P020

The Petroleum Act requires landholders

to be sent a letter advising of
Santos intention to negotiate an
access agreement at the start of the
negotiation process. A Santos Land
Access representative will telephone
the landholder to advise that the
letter (including a detailed plan of
where Santos wants to drill and the
methods to be used) will be sent, and
answer any initial questions. The Land
Access representative remains the
landholders primary contact during
the negotiation and core hole drilling
process.

Lease Build
Over a period of about three days, an
area of 100m x 100m is fenced and
graded level. The site is referred to
as a lease. Topsoil is kept separate
for rehabilitation. When possible
surface tanks will be used onsite for
containment of drilling fluids, called
sumpless drilling. However, when
sumpless drilling is not possible two
sumps for drilling fluids (with a total
capacity of 200 000L) are excavated
and lined with heavy grade plastic. The
freeboard on the sumps is kept to a
minimum of 300mm.
On the spot where the corehole will
actually be drilled a cellar is built. A
cellar is a hole that is approximately 2
metre square and 2 metre deep and has
steel sided frame installed to hold back
the earthen walls. The cellar is used
to recess wellhead components and
drilling equipment to have operations
at a workable height.

Conductor casing is set deep enough

that it is within a competent formation
and able to circulate drilling fluids to
the rig without eroding the surface
sediments below the rig and rig
foundations. It may also be used
to structurally support some of the
subsequent casing or wellhead loads.
Aquifers used by farmers in the
Gunnedah Basin are less than 150m
below the surface. As Santos is drilling
to a minimum 200m below the surface,
it is important to ensure the steel
casing and cement form a barrier that
prevents drilling mud and water from
lower aquifers mixing with water in
upper aquifers. This isolation technique
has been standard practice in the oil
and gas industry for decades and is the
second stage of construction, running
and cementing in place surface casing.
Surface casing prevents cave-in of

SurfaceSurface
Casing Casing

Each drilling rig has a unique lease

design that allows for safe, efficient
operation while minimising the
environmental footprint of the site.

The first stage is running and

cementing in place conductor casing.

During the drilling process, fluid is

constantly tested for density, pH,
salinity, anions and cations and
total petroleum hydrocarbons and
metals (arsenic, beryllium, barium,
cadmium, chromium, cobalt, copper,
lead, manganese, mercury, nickel,
vanadium, zinc). This testing is part of
standard site monitoring.

A cross-section of the double steel

casing.

After the BOP has been installed,

drilling continues until the depth is
reached where coring is required.
Coring is a drilling method in which sixmetre long cylinders of solid rock and
coal samples are brought to surface
and tested on site before being sent
away for further testing. This continues
until the hole reaches total depth.

After use, drilling fluid is returned

to tanks where the cuttings are
separated, the fluid is tested and then
recirculated. At the completion of
drilling, the drilling fluids are either
recycled or sent off-site to a licensed
waste disposal facility.
Losing drilling fluid is undesirable as it
is the primary means of controlling the
core hole. As soon losses are detected,
a lost circulation material (LCM) is fed
into the hole with the drilling fluid.
LCM is made of cellulose material and
looks like sawdust. It prevents fluid loss
by blocking the pores in the host rock
with cellulose particles.

A cross-section of the abandoned

double steel casing.

In cases where loss prevention

additives do not work, the hole is
completely sealed with a cement plug
which is re-drilled.

Intermediate Casing

Cement pumped up the hole between

the rock (gravel etc) and casing
indicative diagram only.

Biodegradable polymer gels such as

CR-650 or JK-261 (depending on the
manufacturer) is used to lubricate and
increase the viscosity of the drilling
fluid which helps keep the drill cuttings
suspended and lifted to surface in
the drilling fluid. It also can stabilise
reactive clays and shales.

Once drilling is completed to the

required depth, the hole is tested,
logged and if production casing not run
the hole is then abandoned. During
the abandonment process, the hole
is sealed completely from bottom
to surface using a series of cement
plugs. The cement seal prevents any
cross-flow of water and gases between
formations, as well as isolating all
down hole zones from the surface.
The wellhead and steel casing (filled
with cement) is cut off 1.5m below
surface level, capped with a metal
identification plate and buried. All
other surface equipment is removed.

Site Rehabilitation
As required by the REF, sites are
rehabilitated within 6 months of
the core hole being plugged and
abandoned. Sumps are refilled, topsoil
is replaced, ground seeded and fencing
removed. The recovery of the site is
monitored until the landholder and
Land Access Representative agree that
restoration is satisfactory.

PILOT TESTING
Pilot tests are performed to gather
additional information (permeability,
reservoir pressure, gas and water
production and composition) about
gas-bearing coal seams.
Pilot test results help Santos to
understand the information from the
exploration core holes in more detail. It
also allows water handling methods to
be trialled for use in the region.

Drilling fluids currently used on Santos

exploration sites are water-based and
uses two main drilling additives, salts
and gels.
Salts such as Potassium Chloride are
used as a weighting agent and to help
control swelling clays. It is important
to weight the drilling fluid to prevent
any influxes of fluid or gas while
drilling. Preventing clays from swelling
ensures the hole stays open. The drill
cuttings (rock chips) are brought to
surface suspended in the drilling fluid.

Plug and Abandon

Basic Principles

Drilling Fluids
Cement pumped up the hole between
the rock (gravel etc) and casing
indicative diagram only.

Core hole Design

Each core hole has a specific design
that complies with the regulations, and
integrates the expected core point and
total depth of the finished hole. Santos
uses an exploration core hole design
that isolates aquifers behind one or two
layers of steel casing held in place with
cement and is constructed in stages.

Once surface casing has been installed,

the Blow Out Preventer (BOP) is
mounted on top as required by the
Petroleum Act. The BOP seals the well in
the event of excess pressure, allowing
drilling engineers to assess the
situation before taking further action.
It is important to note that none of the
numerous exploration and water bores
drilled in the Gunnedah Basin have
shown abnormally high pressures.

The final stage of the well design

consists of either a) plug and
abandonment of a well which is no
longer required and so is fully sealed
with cement or b) completion of a well
which may be used for further testing
or production. Completion involves
placing a steel casing in the hole to seal
off the geological formations above the
target formation. This prevents cross
contamination from fluid or pressure
and holds back unstable formations.

Drilling Site Supervision

Santos drilling rigs operate under
the Petroleum Act (onshore) NSW
1991, which requires high standards
of well design and abandonment.
Santos rigs are contracted and
operated by external companies.
They operate under the direction
of a Santos-employed supervisor
called the Operating Company
Representative (OCR) - who overseas
all site operations. The Onsite Company
Representative is responsible for
all operational decisions and works
under the instruction of an approved
work program and Operations
Superintendent. They also look after
safety, compliance and record keeping
on site.

unconsolidated, weaker near surface

sediments and can be used to protect
shallow, water bearing sands from
contamination.

Site rehabilitation Broken Dam, December 2009.

Pilot testing involves drilling a well

to just below the coals of interest and
using a down hole pump to pump water
out of the coal seam. Once sufficient
water has been removed from the coal
seam to reduce pressure, gas may begin
to flow from the seam. When sufficient
data has been obtained from the well,
the hole is sealed at the well head and
the test is completed.
Pilot testing is carried out in areas
where exploration has shown that the
coal seams have indicated potential to
produce gas.

Site rehabilitation Broken Dam, February 2010.

Site identification, land access and site

supervision are the same as for core
hole drilling.

NSW
CSG
GUNNEDAH
GAS
exploration CoreBASIN
hole drilling

FACTSHEET
& pilot testing FACTSHEET insert
Version 2 March 2012

drive head

Surface
Equipment

motor
pulley system drives sucker rod
stuffing box
test sample point or extra flowline
water flow

sonolog point
gas/water flow from annulus
tubing hanger
2 inch ball valve

steel casing

tubing

Subsurface
Equipment

sucker rod

progressive cavity pump (PCP)

anchor

tailpipe intake

Not to scale.