Transerv Energy has started a two‐well drilling program aimed at unlocking the tight gas potential at what it dubs is Australia’s biggest undeveloped onshore gas field in the Perth Basin.

The first well in the program at the Warro gas field, Warro‐5, was spudded at the weekend and is expected to take 28 days to reach the planned total depth of 4250 meters.

The well is being drilled by the Enerdrill Rig‐3. When the well reaches total depth it will be cased from surface to total depth and suspended at the end of drilling operations.

Transerv will then drill Warro‐6 before undertaking reservoir stimulation and testing of both wells.

An independent study by a U.S.‐based team of tight gas experts has indicated that Warro contains a substantial volume of gas with the potential to flow at high rates.

Wells might be capable of delivering 4 billion cubic feet (Bcf) to 10Bcf of gas each, with existing water results and more if the water can be reduced or avoided by drilling away from the faults.

The study also confirmed an in‐place gas resource of 8Tcf to 10Tcf, with potentially 3Tcf to 4Tcf recoverable if appropriate reservoir stimulation is successfully carried out.

Warro‐5 and 6 are designed to demonstrate the ability of wells in the Warro Field to flow gas at commercial rates and avoid the issues associated with excessive water in Warro‐3 and 4 wells.

The drilling of Warro‐5 and 6 is being funded through an existing farm‐out arrangement with Alcoa of Australia. Under this agreement, Alcoa can earn up to a 65% interest in the field by spending $100 million.

Alcoa has invested about $50 million to date and these wells are expected to cost a further $30 million to $40 million, depending on results.

The Warro Field is located 200 kilometers (km) north of Perth and 30 km from the Dampier Bunbury Natural Gas and Parmelia pipelines.

Shares in Transerv fell 5.4% to 3.5 cents.