CNG Off-take Arrangements
Brisbane, Aug 24, 2023 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) is pleased to provide an update on the sale arrangements for gas produced from its Rolleston West (ATP 2062) project in the southern Bowen Basin. Using its virtual pipeline trucking approach, the Company intends to commence shipping and sale of Compressed Natural Gas Off-take Arrangements ("CNG") to end users in the Bowen Basin as early as November 2023 after the successful construction and commissioning of its compressed natural gas facility.
The Company has entered into a Memorandum of Understanding ("MOU") with Mine Energy Solutions Pty Ltd ("MES") to supply CNG immediately after commissioning of the CNG Facility. MES are working with a number of organisations to install dual fuel (diesel to gas) engines in mining trucks as part of de-carbonisation initiatives in the coal sector. The dual fuel engines require CNG. The majority of the organisations working with MES are remote from traditional gas infrastructure and consequently State Gas's virtual pipeline trucking solution uniquely positions it to provide CNG to these projects. Under the terms of the MOU, State Gas are MES' exclusive supplier of CNG.
To support future production volumes up to the maximum compression capacity of the CNG Facility of 1.7TJ/day and beyond, State Gas has also entered into an MOU with Denison Gas [insert] ("Denison") under which it will jointly develop a CNG intake facility ("the Intake Facility") at Denison's Rolleston Gas Plant. State Gas and Denison have been working closely to jointly develop the relevant engineering solutions which will allow the Intake Facility to efficiently receive CNG delivered using State Gas' virtual pipeline trucking solution for processing at the Rolleston Plant. As part of this arrangement, Denison will purchase up to 1.0TJ/day from State Gas for on-sale into the domestic gas market in conjunction with its existing daily spot capacity.
Executive Chairman, Richard Cottee said "State gas has shown itself to be at the forefront of innovation with its CNG Project being the first time CSG from the field is being sold as Compressed Natural Gas. The MES offtake for conversion of diesel fleets to a lower carbon dual fuel highlights how important natural gas remains in the transition to a lower carbon future. The Company has developed an initial path to market for its initial cargoes of CNG, in addition to a longer-term solution which will provide a pathway for much greater volumes of CNG to be processed and sold into domestic and export gas markets. These off-take arrangements reflect the value that the Company has unlocked through its flexible virtual pipeline trucking solution and provides it with multiple markets for its production over time."
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 program in parallel with permitting for an export pipeline and development facilities to facilitate the fastest possible delivery of gas to market. State Gas' current focus has been to confirm the producibility of the gas through production testing of the wells.
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