Company Update
Brisbane, Dec 3, 2024 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) provides an update on its short-term plan for the Rolleston West drilling program and high density natural gas ("HDNG") operation.
As previously advised, the Company's access to the Rolleston West project area was blocked by the landowner for 18 days, with access being reinstated on 19 November 2024. The landowner's decision to block our access has impacted both the HDNG operation and the drilling program.
Blocked access to the HDNG plant has resulted in the Rougemont 2/3 dual lateral well system requiring a further process of dewatering. Based on the Company's previous experience, gas flow occurs when the well is dewatered to a depth of around 340 metres. State Gas anticipates that managing the draw-down process to ensure underlying coal structures are not damaged will take approximately six to eight weeks.
As a consequence, the Company has agreed with its HDNG customer, to suspend delivery arrangements without penalty, with the intention to recommence in late Q1 calendar 2025. In the interim, State Gas, its partners and customers will undertake optimisation work on the supply chain to support an increase from two to six mine trucks using HDNG, when supply recommences.
Blocked access to drill-pad locations has resulted in the program not being completed prior to the start of the wet season, as originally planned. Unfortunately, the wet season has commenced, and wet weather experienced over the last week has already made access difficult. The Company has assessed the wet season weather forecast and drill rig standby costs and believes it is in the best interest of all stakeholders to defer commencement of the drilling campaign until early calendar 2025 at the first available clear weather window (expected to be in March and April 2025).
The Company's Managing Director, Mr Doug McAlpine said "Deferral of the drilling program and disruption to our HDNG supply arrangements are frustrating by-products of having our land access blocked for an extended period. Despite this we are focused on delivering on our overarching strategy and plan."
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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