All resolutions were passed with an overwhelming majority.
Sydney Gas Board welcomed the support from AJ Lucas and believes the funds and technical expertise that Lucas brings to Sydney Gas will bolster development of its work program with its joint venture partner AGL.

Milbrodale property
ON August 29, the purchase of a property at 2544 Putty Road, Milbrodale was finalised. We plan to drill three test wells on the property, which will be part of nine test wells in the Broke-Bulga area. To maintain the property as productive rural land we are considering livestock agistment. A couple of further properties are being considered for purchase in the Broke – Bulga region.

CURRENT CORING

Paynes Crossing
Coring at the Paynes Crossing site finished on September 18 and permeability tests began this week.
Various coal seams intersected by a core hole may be tested for permeability. Permeability is an important factor in determining if a coal seam is suitable for natural gas recovery. The greater the permeability of a seam the better the natural gas may flow.
At this core hole permeability is being tested by pumping approximately 5500 liters of water into the coal. Sensors then test the rate that the water pressure in the coal drops during a 24 hour period. The way the water pressure drops can indicate the permeability.
In Paynes Crossing we are testing four coal seams. Not all core hole exploration involves permeability testing of coal seams, but it is often a good opportunity to gather as much data as possible before finishing an existing hole.
The surface equipment needed to conduct the test is a truck mounted pump. Down the hole is placed the drill string, packers, sensors and monitors. This equipment is very small, considering the hole is only approximately ten centimeters in diameter.
We anticipate permeability testing will finish next week. The hole will then be gradually filled with high slurry concrete, which we let set in stages and the drill rig will then be removed from the site. We will update you with further progress at Paynes Crossing.

Wollombi
Sydney Gas will only drill ONE four-inch core hole in the Wollombi area. One core hole is generally enough to provide the geological information required.
However, we understand that one main issue some residents have raised is the proximity of the current site to the main road and the possible visual impact of the temporary drilling. In an attempt to address this concern we have proposed some possible alternative sites for the exploration.
We asked our geologists to find any alternative geologically suitable locations in the Wollombi area. They developed a map that indentified another seven possible locations. Three of these locations, core holes Wollombi 4, 5 and 8, we immediately ruled out due to their close proximity to the township or the existing site. We then provided this map to the Wollombi Against Gas Extraction (WAGE) group, to see if any of these locations better addressed the issues of visual and noise impact. Please see this map on page three of this update.
Sydney Gas has not made any attempt to approach any of the landholders in these areas. We already have permission from the current landowner to drill on their property at the existing site and we have no need to sign further access agreements unless the community would prefer us to change locations.
While we have permission from the land owner to drill a hole on his land and we have permission from the State government to drill the exploration hole, we are still open to negotiate with members of the community who are concerned about the drilling of a temporary core hole and we are keen to ensure it is as non-disruptive as possible. We understand that some members of the community oppose any four-inch holes in their area, but we want to work to find some common ground for one temporary core-hole.

Maison Dieu
SITE preparation for the core hole at Mason Dieu has begun. The drill rig from Glendon will be sent to the Maison Dieu site, once works at Glendon are complete.

CORE CONCLUSIONS

Belford
DRILLING of the core hole at Belford finished in mid-July and the rig left the site on July 29. The site rehabilitation has begun and native grasses have been sown on the site. The recent steady rainfall should give the grasses a good environment for growth. Once the grasses are established the landowner will be able to give their assessment of the rehabilitation. A full report will the
be made to the department of primary industries for their final approval of the site.

NEXT STEPS IN EXPLORATION

Seismic surveys
SYDNEY Gas is preparing a review of environmental factors (REF) for the New South Wales Department of Primary Industries, to conduct approximately 190 kilometres of seismic surveys throughout the Upper Hunter area.

More than 150 kilometres is within petroleum exploration licence four (PEL4), which is mainly in the Muswellbrook Shire. The remaining seismic lines will be in PEL 267, which will be within the Singleton Shire. Once the REF is prepared we will post maps of the seismic lines on the Sydney Gas website.

Core holes
THE next four core holes to be drilled are in the Muswellbrook Shire and the Upper Hunter Shires at Martindale, Manobalai, Gungal and Rossgole. The review of environmental factors is currently being assessed by the New South Wales Department of Primary Industries.

Test wells
ON August 20, Sydney Gas presented plans to the Broke community for continued test well exploration in the area.
The initial plan includes:

reopening the existing two wells in Broke, and establishing two other pilot projects in the Broke – Bulga area.
In total eight or nine wells are planned in the Broke – Bulga area. Each well will operate for approximately nine months.

The well locations and infrastructure is still being planned.

Sydney Gas will continue to work with the Bulga Community Consultative Committee as
part of the planning.

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