Annual Report to Shareholders
Brisbane, Sep 28, 2023 AEST (ABN Newswire) - State Gas Limited (ASX:GAS) (STGSF:OTCMKTS) is a gas exploration and development company with operations in the southern Bowen Basin in Central Queensland. The Company's mission is to support energy markets through the efficient commercialisation of previously undeveloped gas resources. It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its acreage in highly prospective areas that can either apply the Company's compressed natural gas ("CNG") trucking approach or have access to traditional gas pipeline infrastructure.
The Company's existing 100% owned projects at PL231 and ATP 2062, in conjunction with joint venture interests over substantial adjoining areas, means that the Company has exposure to a highly prospective gas producing region in the southern Bowen Basin. In addition to supporting substantial 2C gas resources, the Company believes there are significant opportunities for synergistic and coordinated development of this important gas region over time.
The Company has continued to refine its strategy of delivering early-stage production using its CNG trucking approach. During the year, the Company completing a range of planning and precommissioning activities, to enable the commencement of construction of the compressed natural gas facility ("CNG Facility") and begin production and sale of gas ("the CNG Project").
Pursuant to the successful completion of capital raising transactions post year end, funding is now in place to allow construction of the CNG Facility. It is the Company's intention to immediately install and commission the CNG assets and commence selling compressed natural gas using its CNG trucking solution.
The Company's CNG trucking solution (or a Virtual Pipeline) draws on the North American experience in the cost-effective development of this option, to commercialise gas production in infrastructure remote areas. The Company has studied this technology and, in conjunction with its engineering partners, developed a unique application for coal seam gas ("CSG"). When completed, the Company's CNG facility will intake, dehydrate and compress CSG provided from Rougemont 2/3. The CNG is then filled into safe, specially designed gas tube trailers that will transport the gas to end users or an existing pipeline tie-in location. The existing ATP 2062 instrument and associated environmental approval allow the operation of the compression facility at that location during production testing.
Successful execution of the CNG strategy will begin to demonstrate the Company's credentials as an innovator in the junior energy sector and provide a pathway to realise the significant value inherent in the Company's asset base. It will allow the Company to generate modest operating cashflows which will see it significantly reduce its reliance on new equity capital to finance its exploration activities and other operating costs.
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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.