The commencement of Nangu-1 will be the fourth well in 2010 for the Buru Energy (ASX: BRU) Canning Superbasin drilling campaign, with the new well located 250 kilometres south of Broome in Western Australia.
Nangu-1 is the second well in the joint exploration program with Mitsubishi Corporation, and is targeting a potential resource of 1 million barrels of condensate and 15 Bcf of gas, on a P50 basis if hydrocarbons are present.
The company said success at Nangu-1 would create the potential for the development of a regional gas gathering and condensate production project based on the identified follow-up potential in the area.
Of major importance for Buru, the well is located close to the Great Northern Highway, allowing rapid commercialisation, potentially through sales to the major mining projects in the area.
Eric Streitberg, executive director, said “Nangu-1 is an important test of a concept that has the potential to provide a stepping stone gas development for the joint venture.
"The well is located 200 kilometres closer than our other projects around Broome to the Port Hedland off take point for our proposed Great Northern Pipeline project."
Drilling is expected to commence in the next few days, with the well expected to take a total of 13 days to drill on a dry hole basis.
Subject to the terms of the farm-in agreement between Buru and Mitsubishi Corporation, Mitsubishi Corporation is obliged to fund 80% of the costs of Paradise-1 (the first well in the JV) and Nangu-1 as part of an expenditure commitment of $22.4 million in 2010 to earn an initial 40% interest in the majority of Buru’s permits.
Paradise-1 is currently drilling ahead with Buru’s Fairway Rig.