Quarterly Activities Report
Brisbane, Jan 31, 2022 AEST (ABN Newswire) - Following the $8 million capital raising completed in September 2021 for State Gas Limited (
ASX:GAS), the last quarter of the 2021 calendar year has been all about following up the tantalizingly good outcomes from the Rougemont 2 core hole at Rolleston-West, and further progressing the reserves at Reid's Dome in Central Queensland. The goal is to deliver much needed natural gas to an increasingly tight domestic and worldwide gas market.
QUARTER HIGHLIGHTS:
- Reid's Dome Gas Project advanced through production testing of Nyanda-8 and Serocold-1 wells
- Rougemont-2 production test at the adjoining Rolleston West Gas Project in Central Queensland commenced to confirm producibility of gas identified by Q2 drilling
- Consistent, increasing, gas flows from both Nyanda-8 and Rougemont-2 wells
- Decarbonisation initiative with Rockminsolutions Pty Ltd to investigate the commercial potential for secure long term underground sequestration of CO2.
This proved to be quite a challenging feat given that an increasing La Nina event delivered an exceptionally wet spring earlier than usual. Whilst there have been timing delays due to the combination of Covid and wet weather, I am pleased to report that this exploration and appraisal programme remained within budgetary constraints.
At Reid's Dome (PL 231), with its inherent high gas content and proven production of gas from depths as great as 1150 metres, the Company decided to undertake remedial work at the Nyanda-8 and Serocold-1 wells. To overcome 'skin damage' the Nyanda-8 well was 'jetted', following which production testing commenced on 28 November. The impact of jetting appears to be allowing a slow and steady build up in gas production which is expected to continue to increase with ongoing pumping.
At Serocold-1 the limitation arose from silting of the pumps and therefore a different solution was implemented. Non-gas producing zones, a source of sand migration, were sealed off with a foam squeeze. Initial indications of consistent production of increasing gas volumes augurs well. While the rods in the pump appear to have parted, a workover will be carried out to allow testing to resume. Serocold-1 should therefore be back on production in the first full week of February.
At neighbouring Rolleston-West (ATP 2062) the focus has been on confirming the producibility of the gas identified by the Rougemont-1 and -2 coreholes with a production test of the highly permeable Rougemont-2 area. Given the high permeability of the coals around Rougemont 2 combined with the experience of the performance of CSG wells in the Bandanna coals from Fairview to Mahalo, State Gas is taking a cautious approach to pumping, drawing down the water at the slow rate of around 3 metres /day. The result is that, despite the producing coal seams being at relatively shallow depths of between 315 metres and 386 metres, the water is still about 50 metres above the top coal seam. Despite the coals being under water, it is extremely encouraging to note that Rougemont-2 is already experiencing small, steady but consistent growth in gas production. It should take another couple of weeks of dewatering before the water intersects the top coals and another couple of weeks after that before increased gas flows are expected.
Given State Gas' progress to date and the consistently higher gas pricing being achieved - remembering that all of our acreage is entirely free of domestic gas reservation restrictions - the Company has completed its baseline environmental studies. These studies are the first step towards applying for environmental approvals for gas production hopefully next year.
The Company has also commenced an initiative to address decarbonisation, entering into a Memorandum of Understanding with mineral exploration company Rockminsolutions Pty Ltd. The project will investigate the potential of a site on the western border of the Company's ATP 2062 to securely sequester large volumes of carbon underground through an innovative process where the carbon is converted into a mineral (ie rock) form that will be stable through millennia.
*To view tables and figures, please visit:
https://abnnewswire.net/lnk/UP72QM5J
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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