CNG Facility Construction Update
Brisbane, Nov 21, 2023 AEST (ABN Newswire) - State Gas Limited (ASX:GAS) (STGSF:OTCMKTS) is pleased to provide an update on the construction of its compressed natural gas ("CNG") facility which will support the processing and initial sale of production testing gas from the Company's Rolleston West Project.
State Gas remains on schedule for mechanical completion and commissioning of the CNG Facility by Christmas. The Company anticipates that first gas will be produced in conjunction with commissioning activities and production will be ramped up progressively over subsequent weeks as the Rougemont 2/3 dual lateral well is brought back on-line. First gas sales should therefore begin in January 2024 in line with the demand profile of our initial customer.
Weather conditions during site civil and construction works have been challenging with bushfires, followed by periods of rain which have impacted site productivity. Ground conditions have proven to be more challenging than initially expected, with the gathering system requiring more civil preparatory work and the CNG Facility pad needing a greater level stabilisation to ensure safe and reliable operation of the plant.
The cumulative impact of these externalities has added approximately three weeks to the construction schedule.
The Company has continued to complete pre-commissioning and compliance activities on the compressor and dehydrator in Brisbane with the objective of reducing in-field commissioning times when civil site works are complete. These activities have identified a small number of equipment compliance issues which required additional parts procurement and electrical work. It has been highly efficient from a cost and time perspective to address these minor compliance issues in Brisbane. The cost impact of these additional civil and construction works is within the contingency allowance for the project.
Executive Chairman, Richard Cottee, said: "Not unexpectedly, there have been some weather-related challenges with initial site civil construction activities. However, ongoing wet weather-related risks are now largely ameliorated. The Company realised significant upfront cost and time efficiencies from procuring the compressor and dehydrator offshore. Although additional costs have been incurred to make these assets compliant to Australian Standards, we have delivered a cheaper and faster path to first gas than if critical components of the CNG Facility had been fabricated by domestic suppliers. The Company remains focussed on delivery of initial cargoes of CNG in January 2024."
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.