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ADX Energy gets nod to tap into Upper Austrian gas

Updated: Apr 24

ADX Energy will drill Welchau in Austria’s winter. Credit: File

Perth-based company ADX Energy will kick-off a drilling campaign at its flagship 807 billion cubic feet of gas equivalent (bcfe) Welchau gas prospect in Upper Austria late this year after gaining crucial government approval for drilling and testing.

The drilling permit issued by the local Mining Authority, on behalf of the Ministry of Finance of the Republic of Austria, allows the company to drill and test the Welchau-1 well and undertake a longer-term production test if required.

ADX says its timely approval follows the review of extensive technical, legal and environmental documentation, together with expert opinions and a public hearing conducted in June, where no major objections were aired.

Management says the final stage of the permitting process before spudding the well will be the receipt of an environmental clearance based on the evaluation of a report that now been completed and submitted to the local Upper Austrian governing body. The process will include a stakeholder hearing period similar to that completed as part of the drilling permit approval process.

Under the terms of the drilling permit, the Welchau-1 well must be drilled during the Austrian winter period between October 1 and 31 March next year. The drilling operations are expected to take about two months.

Management says its permit approval is tied to two specific rig types, including a drilling rig and a workover rig, provided by drilling contractor RED Drilling & Services GmbH. RED has previously demonstrated local success by drilling ADX’s Anshof–3 discovery well within budget and without any lost time or safety incidents.

The Board of ADX is very impressed and encouraged by the transparent and efficient permitting process conducted by the Austrian Mining Authority for evaluating extensive technical, legal and environmental documentation, as well as openly addressing relevant stakeholder and community interests. The Welchau exploration project is an exceptional domestic energy supply and economic opportunity for the State of Austria. ADX and our partner MCF Energy Ltd are committed to responsible gas exploration. We look forward to the ongoing engagement with our stakeholders and the local community based on factual information in relation to the project’s environmental impact, the relevant safeguards deployed, as well as the potential social and economic benefits if the well is successful. ADX Energy executive chairman Ian Tchacos

As part of an energy investment agreement, the company’s joint venture partner, Canadian-listed MCF Energy, has to fund half of the cost of the Welchau-1 well to earn a 20 per cent economic interest in the Welchau investment area. ADX recently added four additional leads around the prospect on the back of a technical evaluation.

Welchau is ADX’s flagship exploration prospect and follows up on an accidental gas hit at the Molln–1 well back in 1989, when the industry was focussed on finding oil. The well struck a 400m gas column and produced at 3.5 million cubic feet of gas per day for 16 days, with a rich 40 barrels of condensate per million cubic feet of gas.

Management believes its Welchau prospect could be connected to the Molln-1 reservoir and that the Welchau-1 well will drill at an up-dip or higher location on the trapping structure.

Welchau is relatively shallow, sitting about 1120m below the surface. It is close to access roads and about an 18km tie–in distance from Austria’s national gas pipeline network. The main reservoir interval is a fractured carbonate, deposited during the Triassic Period and trapped in a trending ramp anticline with more than a 20km lateral extent and 100-square-kilometre maximum closure area.

An independent review into the potential size of Welchau, completed by international energy group GaffneyCline and Associates, suggested a low-side estimate of 365 bcfe, up substantially from ADX’s estimate of 212 bcfe. ADX says its best technical estimate is 807 bcfe with a high-case estimate of 1631 bcfe of prospective recoverable gas.

But the company says that even the low-case gas volume estimate for Welchau represents a potentially high-value resource due to its location in central Europe and proximity to existing gas networks.

The planned Welchau-1 well is an important, high-impact well that has attracted industry, government and media attention. It has clear support for the development of natural gas, which is recognised as an important transition fuel by the European Union and critical for Austria’s energy security.

Further afield, the company has been busy topping up its exploration portfolio and now has 20 prospects totalling 213 million barrels of oil equivalent (MMboe). It says 195 MMboe lies within the high-impact exploration or trend exploration categories, with about 18 MMboe added to the low-risk, low-cost appraisal/exploration category – an increase of 340 per cent, due in part to the company leveraging artificial intelligence (AI) to detect stratigraphically-trapped reservoir sands on 3D seismic.

In a funding boost announced earlier this month, ADX will receive $19.2 million from European energy giant MND in exchange for a 30 per cent interest in its 5.2 million-barrel Anshof oil asset. It comes weeks after the company revealed an eight per cent increase to its Austrian oil and gas production rate for the past quarter, mainly at its Zistersdorf & Gaiselberg oilfields in the country’s north-east, in addition to some from the Anshof-3 extended well test.

ADX is also progressing with its Vienna Basin green hydrogen project as

hydrogen is increasingly considered to be an attractive alternative to natural gas, both from security of supply and environmental perspectives.

Austria is aiming to produce all of its electricity from renewable sources by 2030 and be climate-neutral by 2040. As a result, the country wants to produce 5000 gigawatt hours of green gas by 2030.

A green hydrogen early production concept will be reviewed and developed in the second half of this year. ADX’s green hydrogen concept may involve large-scale hydrogen storage in depleted reservoirs within its Zistersdorf & Gaiselberg oil fields.

As pre-drill excitement builds, watch this space for results of what could be a life ring for the European energy crisis.

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