State Gas Limited (ASX:GAS) to Commence Gas Sales with Trucking of CNG

State Gas to Commence Gas Sales with Trucking of CNG in Response to Australia's Gas Shortfall

As a response to the predicted domestic gas shortfall, State Gas Limited (ASX:GAS) (State Gas or the Company) has initiated a project to undertake trucking of CNG to enable commencement of gas sales from its Central Queensland projects within months.

Highlights

- State Gas to institute trucking of compressed natural gas (CNG) to commence early sales of gas in Eastern Australia. This form of 'virtual pipeline' is a substitute for a physical pipeline, where gas that would typically be conveyed through a conventional gas pipeline is instead transported as CNG in containers by road.

- Two stage development, commencing with the trucking via CNG, followed by development of a physical pipeline in stage-two and re-deployment of the virtual pipeline assets elsewhere within the State Gas portfolio.

- First gas sales expected in Q1 2023, coinciding with a predicted market shortfall in 2023.

Under the CNG trucking project, gas from the Company's 100% owned Reid's Dome Project (PL231) will be compressed and then trucked by road approximately 60km to a delivery point accessing the high-pressure gas infrastructure network, thereby creating a "virtual pipeline" for the gas.

Initial gas sales will be to the domestic spot market, taking advantage of the unprecedented prices currently available and responding to the national need.

Deliveries will initially be sourced from the established conventional gas resource in the northern area of PL231. This Reid's Dome gas is immediately available and of pipeline quality, and requires only dehydration to meet pipeline specifications.

Gas was first discovered at Reid's Dome in 1954 when there was no market for the gas, and no pipeline or other techniques available to transport the gas.

State Gas has has sourced compression and transportation equipment to enable sales of ~1TJ/d. Commencement of sales is targeted for early Q1 2023.

In the USA, CNG has historically been used onshore for gas supply over distances up to 800 km. The CNG trucking project will facilitate early gas sales to generate revenue for State Gas and help meet the current market shortfalls, while work continues for a larger capacity "in-ground" export pipeline. On ground survey work to refine the preferred pipeline route is currently being planned, prior to seeking the requisite approvals.

Once the 'in-ground' pipeline is complete, the virtual pipeline system can be redeployed to enable the commercialisation of otherwise stranded gas, or sales of production test gas from the Company's projects.

State Gas Executive Chairman Mr Richard Cottee commented on the development:

"I am particularly pleased to be announcing this project at this critical time. State Gas was established to be an alternative supplier bringing new, undeveloped gas resources into the constrained East Coast market. With this project we are bringing this ambition to reality."

"Not only are we fulfilling an ambition, but doing so at a time of great need for gas, as highlighted by the ACCC report on the gas market released this month . The ACCC found in its latest gas report that the outlook for the east coast gas market has significantly worsened, with an expected shortfall of 56 PJ in 2023."

"In addition, the CNG project will generate first revenues for the Company, helping to underwrite further development and expansion".

Mr Cottee further noted that spot gas prices at Wallumbilla averaged $27.31 over the June '22 quarter.


About State Gas Limited

State Gas Limited (ASX:GAS) is a Queensland-based developer of the Reid's Dome gas field, originally discovered during drilling in 1955, located in the Bowen Basin in Central Queensland. State Gas is 100%-owner of the Reid's Dome Gas Project (PL-231) a CSG and conventional gas play, which is well-located 30 kilometres southwest of Rolleston, approximately 50 kilometres from the Queensland Gas Pipeline and interconnected east coast gas network.

Permian coal measures within the Reid's Dome Beds are extensive across the entire permit but the area had not been explored for coal seam gas prior to State Gas' ownership. In late 2018 State Gas drilled the first coal seam gas well in the region (Nyanda-4) into the Reid's Dome Beds and established the potential for a significant coal seam gas project in PL 231. The extension of the coal measures into the northern and central areas of the permit was confirmed in late 2019 by the Company's drilling of Aldinga East-1A (12 km north) and Serocold-1 (6 km to the north of Nyanda-4).

State Gas is also the 100% holder Authority to Prospect 2062 ("Rolleston-West"), a 1,414 km2 permit (eight times larger than PL 231) that is contiguous with the Reid's Dome Gas Project. Rolleston-West contains highly prospective targets for both coal seam gas (CSG) and known conventional gas within the permit area. It is not restricted by domestic gas reservation requirements.

The contiguous areas (Reid's Dome and Rolleston-West), under sole ownership by State Gas, enable integration of activities and a unified super-gasfield development, providing economies of scale, efficient operations, and optionality in marketing.

State Gas is implementing its strategic plan to bring gas to market from Reid's Dome and Rolleston-West to meet near term forecast shortfalls in the east coast domestic gas market. The strategy involves progressing a phased appraisal prog

 

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