Water uncertainty threatens Central Petroleum’s planned Palm Valley capacity lift

PV14 flow rate falls short as water complicates the result

Central Petroleum Limited (ASX:CTP) has finished drilling PV14 at Palm Valley, but the first read on the well is weaker and less certain than hoped. A 90-minute rig flow test produced an estimated 3.2 TJ/d of gas on a 100% joint venture basis, below Central’s target and below the performance of recent wells PV12 and PV13.

The test rate had not stabilised when it ended and was still edging higher at a flowing tubing head pressure of 210 psi. Central said the result could translate to an initial online rate of roughly 3 to 4 TJ/d under typical gathering-system backpressure, although that estimate excludes any further water clean-up or water ingress.

The well is held 50% by Central, alongside Echelon Resources with 35% and Cue Energy Resources with 15%. It targets the Pacoota P1 Sandstone in the Amadeus Basin, where Palm Valley gas is produced from natural fractures without hydraulic stimulation. The gas composition has not yet been analysed, although Central expects it to resemble existing P1 production.

Water production leaves PV14’s sustainable output unresolved

Although the flow test brought no water to the surface, subsequent vacuum flows showed evidence of water production. Central says the tight, naturally fractured reservoir makes it difficult to determine whether that water is residual fluid standing in the well or water entering through open fractures at depth.

That distinction matters. Residual water could clear as the well cleans up, improving production over time. But water entering above the isolated hole section could require additional packers and, in the worst case described by Central, force production to stop. The company points to PV12 as an example where packers successfully isolated water and the well later produced dry gas.

PV14 is nevertheless being completed as a gas producer and will be tied into the Palm Valley gathering network, with commissioning expected before the end of October. The program is part of the company’s Palm Valley drilling campaign, which Central previously said could lift group gas production by about 40%.

PV15 becomes the next test of Palm Valley’s growth plan

Once completion work ends, the Ensign 974 rig will move to PV15, the second well in the two-well campaign. PV15 is planned 2.3 kilometres from PV14 at surface and about 3 kilometres away at total depth, targeting the southern flank of the Palm Valley anticline rather than PV14’s northern-flank position.

Central says PV15 will be only the second well after PV12 to directly access the southern flank, and is closer to the field crest and further up-dip from possible water sources. The two wells are intended to restore Palm Valley plant sales capacity to about 14 TJ/d and deliver at least 10 PJ of gas over their operating lives, though actual outcomes will depend on well performance and existing field decline.

The drilling investment is underpinned by the Northern Territory gas agreement, which was described earlier as supporting a roughly 40% increase in Palm Valley production capacity. PV14 has now made the plan more conditional: its final value will depend less on the short rig test than on sustained dry-gas production after tie-in, while PV15 carries the immediate chance to restore confidence in the campaign.