Sydney, Dec 3, 2007 (ABN Newswire) - Metgasco (ASX: MEL) is pleased to advise that it has entered into a Memorandum of Understanding with BP Australia Pty Ltd to conduct a feasibility study with respect to the supply of in excess of 15 PJ/ pa of coal seam gas from Metgasco's Clarence Moreton basin operations to BP.

As part of the agreement, Metgasco and BP intend to co-operate in conducting a feasibility study for the extension of the planned Casino to Ipswich gas pipeline to BP's Refinery facilities at the Port of Brisbane.

This pipeline development will provide additional security of gas supply to Brisbane, which is currently the only capital city on the east coast of Australia supplied by a single gas pipeline and will relieve congestion on existing energy infrastructure to the Port of Brisbane.

The Casino to Ipswich pipeline, a new gas pipeline between New South Wales and Queensland, is currently planned to supply gas to Metgasco's Clarence Moreton Basin partner CS Energy. Metgasco has commenced the development approval process for this pipeline.

Metgasco intends to immediately commence field development studies to determine the technical and commercial feasibility of achieving this gas supply outcome.

BP's Bulwer Island Refinery refines crude oil to manufacture petroleum products. The refinery plant includes an integrated cogeneration facility which requires gas to produce electricity to run the refinery. The development of alternative gas supplies is a key objective for BP in the establishment of this MOU with Metgasco in order to maintain ongoing security of supply of fuels to Queensland's industry and motoring public.

David Johnson, Metgasco Managing Director said "We are very pleased to be working with BP, a company that has a reputation for investing in the development of infrastructure required to secure Australia's energy future."

"We look forward to advancing our commercial objectives and moving forward with development of the Clarence Moreton basin as a major new energy resource for Queensland and New South Wales" he added.

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