State Gas Limited Stock Market Press Releases and Company Profile
Restart of Production Testing with Streamlined Management
Restart of Production Testing with Streamlined Management

Brisbane, June 2, 2020 AEST (ABN Newswire) - As has been previously announced State Gas Limited (googlechartASX:GAS) has been pleased and excited by the results of its appraisal program conducted late-2019/early-2020 at the Reid's Dome Gas Project (PL-231) in the Bowen Basin.

In particular, the Aldinga East-1A core hole (in the northern area of PL 231) has produced results at the better end of the Company's prognosis, Serocold-1 confirmed the presence of coal seams with promising permeability in the central area of the permit, and the production test at Nyanda-4 flowed gas at rates well above expectations for a single well.

While providing very promising early results, the production tests at Nyanda-4 and Serocold-1 have also faced challenges with failing pumps. Each new coal seam gas field presents its own set of conditions, the "code" for which needs to be "cracked" for successful production. At Reid's Dome the conditions include high number of producing seams, with some productive seams at greater than average depths at other CSG fields.

The Company believes it has made significant steps in "cracking the code" over the last few weeks. Head of Operations Mike Herrington has led a process to investigate the pump failures at PL 231. With the assistance of industry experts he has established the cause (abnormal swelling of the elastomer in the stators Asian-sourced pumps, likely the result of downhole temperature and pressures). With this knowledge, new pumps designed for these conditions are now being manufactured in Canada prior to air freighting to Australia. The pumps are expected at site in approximately 4 weeks, at which time workovers to install them will be undertaken and the production tests will restart. Management expects to be flowing gas again by mid-to-late July. All related costs are within the Company's budget.

The focus for 2020 is completion of the current appraisal program and design of the next phase of appraisal, building on the learnings from the present activities. In addition, building on pipeline studies already undertaken, State Gas is aiming to significantly progress its negotiations with a preferred pipeline owner/operator, establishing the basis on which a pipeline to existing infrastructure networks might be financed and constructed.

In order to increase efficiency and focus on what should prove to be an exciting year ahead for shareholders, the Board is streamlining the management structure. Mike Herrington will now report directly to the Executive Chairman as Chief Operating Officer. He will be responsible for completing the present program as well as implementation of the next phase. James Crowley will continue his role analysing and guiding geological decisions, also reporting directly to the Executive Chairman. Lucy Snelling will be responsible for all areas of the Company not otherwise covered (ie commercial, legal, finance and government relations) and report to the Executive Chairman. Her title will change to Head, Corporate and Commercial from CEO.

State Gas Executive Chairman Richard Cottee said he was looking forward to the next phase of the Company's development.

"I have been very encouraged by the progress to date at Reid's Dome. CSG production involves a "code", which needs to be cracked, and I am confident we have the right team to do that. Mike Herrington has really unparalleled experience in bringing new CSG fields to development, in the US, Europe and Mongolia, well as Australia. James Crowley's geological work has been outstanding; the accuracy of his prognoses to date has been excellent. And Lucy Snelling has done an outstanding job in implementing the Board's objective to achieve 100% ownership of PL 231 and finalise a new development plan recognising the PL-231 permit as a CSG play. I am very pleased to have her with us to lead negotiations with pipeline developers and others."


About State Gas Limited

State Gas Limited ASX:GASState 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.

 

abnnewswire.com 


Contact

Lucy Snelling
Chief Executive Officer
Phone: 0439 608 241
e-mail: lucy@stategas.com

Richard Cottee
Executive Chairman
Phone: 0458 517 850
e-mail: richard@stategas.com



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