ADX gets environmental green light for Austrian gas campaign

ADX Energy has received the environmental clearance needed to drill its Welchau-1 gas well in Austria after getting the green light from the State Government of Upper Austria’s Department of Nature Protection.

Management says it can now begin Welchau drill site construction and intends to kick off drilling operations in January next year, with the program expected to take about 39 days. The company holds an 80 per cent economic interest in the Welchau Investment Area, which contains its well of the same name and other emerging gas prospects.

With a best technical estimate of 807 billion cubic feet of gas equivalent (bcfe) and a high-case estimate of 1631 bcfe of prospective recoverable gas, Welchau is considered the company’s flagship project. It is relatively shallow, sitting about 1120m below the surface. The site 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 a 100-square-kilometre maximum closure area.

As part of an energy investment agreement, ADX’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.

The drilling of Welchau comes at a time when Russian gas still supplies over 50% of Austria’s gas requirements but is now officially threatened to be cut off in 2024. The Welchau exploration project is an exceptional domestic energy supply and economic growth opportunity for the State of Austria. ADX and our partner MCF are committed to responsible gas exploration.

In August, the company had its initial drilling permit issued by the local Mining Authority on behalf of the Ministry of Finance of the Republic of Austria, allowing it to drill and test the Welchau-1 well and undertake a longer-term production test if required.

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 – a drilling rig and a workover rig to be 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.

While the Welchau drill site will be located on agricultural land, it is in an area of touristic interest and close to a small nature protection area. Management says that as a result of the significance of Welchau’s location, the department took extra care to balance all stakeholder interests, meaning the requirement for environmental research and third-party expert opinions took longer than usual.

However, with approvals now in place, the market will be keeping a close eye on what ADX can uncover when it kicks off its drill campaign early next year.

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