Half Yearly Report and Accounts
Brisbane, Mar 14, 2024 AEST (ABN Newswire) - Since the beginning of this fiscal year, State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) has been singularly focussed on bringing online the world's first, in situ CSG to CNG pilot plant ("the Plant") at its Rolleston West Project, close to the Rougemont 2/3 dual lateral well. The Plant will allow State Gas to compress appraisal gas from the Rougemont 2/3 well and ship it to customers in specifically designed gas trailers, This process is generally referred to as a virtual pipeline. I am pleased to report that the CNG plant is now complete and in advanced stages of commissioning.
In January, we restarted the production testing of the Rougemont 2/3 lateral which had been shut-in following the completion of initial testing in June last year. We had expected a degree of re-charge given the high inherent permeability of the coals. The amount of water being produced exceeds the initial water production when the well was shut-in. This indicates that Rougemont 2/3 is draining a greater amount of coals. When de-watering is completed, this should result in even higher production than forecast.
The Company expects to shortly sign a formal initial offtake agreement for delivery of CNG. While initial volumes will be small, this will support an orderly ramp up of production in the plant. As previously reported, initial cargoes of CNG will be used by a local coal mine as part of its ongoing trial of hybrid engine technology in its mining trucks. The provision of CNG using virtual pipeline gas trailers is a bundled gas supply solution, which reflects significant added value when compared to raw gas from the traditional pipeline network.
The Plant will have substantial available capacity (total processing capacity 1.7TJ/day) and the Company is now actively following up incremental sales leads for its CNG. The revenue from initial CNG sales will be very welcomed and contribute to the capital needed to bring Rougemont into full scale production in time for 2025/26, the year in which the forecast gas shortfall in the east coast market is most dire.
Capital management will remain a key focus of management as the company enters into the exciting production phase of its existence. State Gas is confident that its CNG can support Queensland's coal industry in its efforts to reduce its own emissions by converting its heavy vehicle fleet and other plant from diesel to gas. The Company is now working to identify other use cases for CNG which would be incremental to supporting the large potential customer base in the Queensland coal industry.
The Company has a highly prospective portfolio of gas acreage in the Southern Bowen Basin, which is in close proximity to productive gas projects which are targeting similar coal measures. These exploration areas are close to critical pipeline infrastructure and in conjunction with initial revenues from CNG sales, positions the Company well for continued exploration, appraisal and development.
Richard Cottee
Executive Chairman
*To view the Half Year Report, please visit:
https://abnnewswire.net/lnk/R5M81V6E
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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