Quarterly Activities Report
Brisbane, April 30, 2025 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) releases this update for the quarter ending 31 March 2025 ("the Quarter"). During the Quarter the Company commenced its drilling program to establish a maiden 2P reserve at the Rolleston West Project (ATP 2062) in Queensland's Southern Bowen Basin.
HIGHLIGHTS:
- Drilling results from new Rougemont 5 and 6 vertical wells demonstrate strong coal and gas consistency across the Rolleston West Project area
- Completion of the two wells is expected by the end of May 2025, to be immediately followed by well production testing
- Data provided from these activities will support establishment of a maiden 2P reserve for the Rolleston West Project
The Company has successfully drilled, wireline logged and cased two new vertical wells in the project area and is now in the process of completing the wells which will allow it commence production testing. Preliminary results from these activities have been encouraging having intersected approximately 8 metres of net coal in the Bandanna Formation, between depths of 419 and 520 metres. Elevated gas shows during drilling further support the Company's hypothesis of commercial gas potential of the formation in the Rolleston West Project area.
Exploration Activities
New geological and well performance information gained from the successful completion of Rougemont 5 and 6 will support the Company's plans to obtain independent accreditation of a substantial portion of its existing contingent resources on the Rolleston West Project as 2P reserves. Establishment of an independently accredited maiden 2P reserve estimate for the Project will allow State Gas to begin to negotiate access to pipeline infrastructure which can connect the Project to the Gladstone to Wallumbilla pipeline network. It will also enable the Company to commence the application for a petroleum lease over a substantial portion of ATP 2062.
The two new vertical wells are located close to the existing Rougemont 2/3 dual lateral well system which produced saleable gas during the second half of calendar 2024. All previously encountered coal seams from the Rougemont well series were present in the two new wells, confirming lateral continuity of coal seams in a large area bounded by Rougemont-6 in the north, Rougemont-1 to the south and Rougemont-2/3 to the west. Rougemont-5 and 6 will be completed and flow tested to confirm reservoir permeability during the June and September quarters.
Successful completion and flow testing of the two new vertical wells is expected to reinforce the Company's assumption that the Project area has proven gas content and good permeability. State Gas intends to connect these wells to its high density natural ("HDNG") plant which will enable it to capture and commercialise production testing gas and increase the revenue generating capacity of the Plant.
HDNG Supply
During the quarter, State Gas continued to work with its partners and initial customer to expand the HDNG supply arrangements for the dual fuel engine trial from two to six mine trucks. A supply arrangement for an expanded six truck trial would see State Gas supply approximately 0.5TJ of HDNG per day, constituting a substantial revenue stream for the Company. State Gas and its partners are working with the customer to deliver improvements to the HDNG supply chain to allow more efficient transportation and loading/unloading of higher volumes of HDNG at the customer site.
State Gas and its partners continue to pursue opportunities to deliver dual fuel engine technology and associated HDNG supply to other coal mines near the Rolleston West Project. State Gas remains optimistic that its HDNG supply capability creates substantial opportunities for natural gas (an environmentally superior fuel source to diesel) to allow miners to diversify their fuel sourcing strategy while simultaneously operating lower carbon emissions. In addition to the environmental benefits which arise from capturing production testing gas, the HDNG production plant will allow State Gas to grow an organic revenue stream which will enable it to self-fund an increasing share of its ongoing exploration and development activities.
Outlook
Positive exploration results achieved to date, support the Company's previous comments that this will be an important and productive year for the Company. There are numerous risks which the Company continues to address, and if those risks can be successfully mitigated, there are a number of significant value drivers to be realised by the Company over the coming twelve months:
- growth in HDNG sales and development of a sustainable alternative fuels business;
- external verification of a maiden 2P reserve for the Rolleston West Project and ultimately support the financing of pipeline infrastructure to the HDNG production plant; and
- wider application of HDNG technology to support increased future production, with further opportunities to commercialise the significant intellectual property and know-how the Company has created through developing the HDNG production plant.
The macroeconomic outlook for energy markets in Australia remains positive for the Company, with a continuing recognition that natural gas will play a substantial role in the provision of base load power, along with diesel fuel displacement while battery technology continues to improve over the long term. Based on the Company's ongoing exploration and development strategy, with particular focus on the Rolleston West Project and application of its unique HDNG capability, State Gas is well-positioned to support the growing energy demand on the East Coast of Australia.
ABOUT THE ROLLESTON WEST PROJECT
The Rolleston West Project (ATP 2062), is 100% owned by State Gas Limited and is focussed on evaluating the viability of conventional and coal seam gas (CSG) production from Bandanna Formation coals, which are extensive across large areas of this and adjoining permits. The capability to produce CSG at commercial levels has already been established at the Arcadia Valley field to the south-east, and at Mahalo to the north-east.
The recent drilling program undertaken in the eastern part of the tenement (Rougemont 1,2 and 3) has intersected approximately 8 metres of net coal, with the thickest seams laterally continuous over many kilometres. The gas content of the coals is between 5 and 6 m3/tonne dry ash free. Gas is at or near pipeline quality, between 93.8% and 96% methane.
Production testing has established sustainable commercial gas flow rates and confirmed excellent permeability within the targeted coal seams State Gas is seeking to expand the project ("Rougemont") and move to early-stage production. The Company is currently evaluating a further step-out drilling campaign to confirm the continuity and permeability of the coal down dip of Rougemont 1 and 2 and establish initial gas resource and reserve estimates for the project.
ABOUT THE HDNG FACILITY
State Gas has developed a "first of its kind" in Australia CSG to CNG plant ("the CNG Facility"). When implemented in conjunction with virtual pipeline ("VP") trailer technology, the CNG Facility will be able to deliver up to 1.7TJ/day of pipeline quality natural gas to end users in the Southern Bowen Basin and surrounding areas. This technology has a range of benefits and potential use cases:
- delivers substantial environmental benefits to gas producers, as it provides a reliable method for capturing and commercialising production testing gas which has historically been released to the atmosphere;
- provides a new path to market for pipeline quality natural gas which the Company believes will become increasingly important across a range of industries, including critical minerals, while the economy continues its long-term transition to renewable energy sources;
- is modular and can be efficiently expanded and easily relocated to support gas testing and processing opportunities in new locations; and
- provides access to a new fuel source for end users who are seeking access to smaller, flexible quantities of natural gas, but don't have access to traditional pipeline infrastructure and need to accelerate a transition away from diesel.
ABOUT THE REID'S DOME PROJECT
The Reid's Dome Project (PL 231) is targeting conventional and coal seam gas assets associated with the Reid's Dome anticline, an area of sharply uplifted coals, shales and sandstone formations.
State Gas' exploration activities have established in excess of 30 m of net coals, with gas contents averaging a very high 13.75m3/tonne dry ash free. Commercial levels of sustainable production of conventional gas have been established at the Nyanda-4 well and the Company continues to evaluate a range of techniques to successfully liberate gas from the deeper formations.
The Company is now evaluating how to best develop Reid's Dome in conjunction with Rolleston West to most efficiently leverage infrastructure and reduce operating costs.
*To view the full Quarterly Report, please visit:
https://abnnewswire.net/lnk/97ZZT2A0
About State Gas Limited
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is a Queensland-based gas exploration and development company with highly prospective gas exploration assets located in the southern Bowen Basin. State Gas Limited's mission is to support east coast energy markets through the efficient identification and development of new high quality gas assets.
It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its portfolio in areas that are well located to gas pipeline infrastructure.
State Gas is 100%-owner of the contiguous Reid's Dome (PL-231) and Rolleston-West (ATP 2062) gas projects, both of which contain CSG and conventional gas. The Projects, together some 1,595km2 , are located south of Rolleston, approximately 50 and 30 kilometres respectively from the Queensland Gas Pipeline and interconnected east coast gas network. State Gas intends to accelerate commercialisation of these assets through the application of an innovative virtual pipeline ("VP") solution which will see the Company transport compressed gas by truck to existing pipeline infrastructure or to an end user.
State Gas also holds a 35% interest in ATP 2068 and ATP 2069 in joint venture with Santos QNT Pty Ltd (65%). These two new areas lie adjacent to or in the near vicinity of State Gas and Santos' existing interests in the region, providing for the potential of an alignment in ownership interests across the region over time and enabling synergies in operations and development.
State Gas is also participating in a carbon capture and sequestration initiative with minerals explorer Rockminsolutions Pty Ltd in respect of EPM 27596 which is located on the western border of ATP 2062. This project is investigating the potential of the unique basalts located in the Buckland Basaltic Sequence (located in EPM 27596) to provide a variety of in-situ and ex-situ carbon capture applications.
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