State Gas Limited (STGSF) Executive Chairman's Address to AGM
State Gas Limited's (ASX:GAS) (OTCMKTS:STGSF) 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.
Doug McAlpine Chief Executive Officer Phone: 0488 007 889 Email: doug@stategas.com Richard Cottee Executive Chairman Phone: 0458 517 850 Email: richard@stategas.com
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