Executive Chairman's Address to AGM
Brisbane, Nov 30, 2023 AEST (ABN Newswire) - State Gas Limited's (ASX:GAS) (STGSF:OTCMKTS) strategy over the past twelve months has been to continue to explore and appraise our project within ATP 2062, called Rougemont. We have also focussed on redefining and delivering the Compressed Natural Gas ("CNG") facility which will enable us to capture and sell production testing gas from the Rougemont Project. There has been a significant level of in-field activity during the year, in particular, over the last two months and we are proud of excellent environmental and safety results with no reportable incidents and no LTIs.
We saw the successful production testing of the Rougemont 2/3 lateral, the results of which were sufficiently encouraging to cause the Company to relocate the planned CNG Plant from PL 231 to the Rougemont location. Rougemont is closer to both customers and pipeline infrastructure, has good quality gas and, when the project is finished, should have a higher degree of all-weather access.
The CNG Project is the first time in Australia where CNG has been manufactured in the field and as far as we can determine the first time that a low pressure unprocessed CSG gas been the source of CNG at the field. Notwithstanding the weather-related delays on the CNG Project, we are working to deliver first gas sales in January 2024.
Commissioning is scheduled to commence in January, subject to favourable weather conditions, with gas sales almost immediate.
Prices for natural Gas remain strong, despite the Federal Governments ill-fated intervention, reflecting the tight supply-demand situation on the Eastern Seaboard. The decline of Bass Strait production, accelerated by the investment uncertainty occasioned by the Federal Government's attempts to overturn the laws of supply and demand, continues unabated. In a decade Bass strait has gone from supplying historically around 80% of the Eastern Seaboard's domestic demand requirements to an expected less than 10% next year.
Gas domestically and worldwide continues its healthy growth particularly with this nation's geo-strategic partners in our region. It is in this climate that State Gas will enter the market. Our ability to capture and compress CSG has a range of commercial applications, but importantly allow us to support decarbonisation efforts across a number of sectors that are looking to substitute gas for higher emission fuel sources. This is consistent with the Queensland government's longer-term strategy for an orderly transition to a greater share of renewable power generation.
The CNG Project's initial gas sales will be above the spot price but as volume increases will ultimately track the market fluctuations. There is presently a consensus that the supply of natural gas will tighten considerably from 2027 onwards which, if borne out, should benefit State Gas' shareholders considerably.
The ASX has been quite challenging this year for gas exploration and production companies despite the favourable fundamentals in the actual gas market. In many ways it reminds me of the early 2000's market conditions before the dramatic turnaround which followed. In this climate it was pleasing to see the support for the Company from new and existing shareholders in the recent capital raising.
As previously indicated, Mr Rob Towner did not offer himself for re-election to the Board of State Gas at today's AGM. On behalf the Board I would like to thank Rob Towner for his outstanding dedication to the progress of State Gas. He has been a director of State Gas from before its listing on the ASX. We wish him well in any future endeavours on which he may embark.
In the year 2024 State Gas should be a stronger Company in a very dynamic market.
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.