State Gas Limited (STGSF) $5.5 million Exploration Grant Funding
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) has been awarded $5.5 million of exploration grant funding through the Queensland Government's Frontier Gas Exploration Program ("the Grant"). The Grant will be used to further delineate gas resources and reserves within the Company's Rolleston West coal seam gas ("CSG") project, through drilling of two new vertical wells ("the Campaign").
Successful results from the Campaign will accelerate the Company's application for a petroleum lease over a substantial portion of the project area and support the ongoing evaluation of a significant CSG project in the area.
A key aspect of State Gas' successful Grant application is that through applying the Company's compression and virtual pipeline assets, production testing gas from new wells can be captured instead of flared. This unique capability was essential in satisfying the assessment criteria for the Grant, in particular, being able to rapidly deliver new gas supply to Queensland and the East Coast domestic market.
State Gas' exploration permit ATP-2062 is located approximately 24 km southwest of the Rolleston Gas Plant and 35 km west of the Queensland Gas Pipeline (QGP) and the Wallumbilla to Gladstone Gas Pipeline (WGP). The acreage lies within the southwestern portion of the Bowen Basin in an area known as the Denison Trough. The Late Permian Bandanna formations located in the Denison Trough contain coal measures that produce prolific pipeline quality gas in the Arcadia Valley and Fairview CSG fields 80 - 120 km to the southeast of Rougemont, within the Comet Ridge structural trend. The seams within the Bandanna coal measures can be correlated for many kilometres and generally range in thickness from 0.3 to 3 m with total coal of 7 - 10 m. Gas content is generally consistent throughout, ranging from 4.5 - 6.5 m3/ton with composition greater than 92% methane.
State Gas has already established 279 petajoules of gas Contingent Resources within the project area, having successfully drilled, cored and logged two vertical and one dual-lateral exploration well. State Gas conducted preliminary production testing on its dual lateral well system ("Rougemont 2/3") during calendar years 2022 and 2023. The production testing achieved a stabilised flow rate of 474,000 cubic feet of gas per day which, when processed, is equivalent to approximately 0.5 terra joules of pipeline quality gas per day.
With the support of Grant funding, the Company intends to drill two new vertical wells as identified in Figure 2*. The two wells are adjacent to Rougemont 2/3 in an area that has proven gas content and commercial productivity. The wells are designed to intersect the entire Bandanna Formation coal measures and will have the ability to produce from all the permeable seams. This design will maximise the resultant reserves proven up by the wells, and which may be sufficient to underwrite a pipeline connection to the national pipeline grid.
The company considers that the delivery of additional exploration and appraisal wells stepped out from its existing dual lateral well system will serve multiple purposes:
1. further delineate gas resources for the purpose of supporting recognition of initial Proved and Probable 2P reserves:
2. demonstrate the commercial viability of a larger scale gas project, potentially capable of attracting third parting funding for pipeline infrastructure; and
3. bring to market new gas supply which can be immediately processed into HDNG and sold using the Company's existing HDNG production facility and Virtual Pipeline (VP) technology.
Additional production testing gas from these new wells will contribute to increased utilisation of the HDNG production facility and will support local coal mining operations that are seeking to reduce emissions through use of HDNG in place of diesel in their mining truck fleets.
State Gas' Executive Chairman, Mr Richard Cottee said, "Qualifying for this exploration grant funding is a strong endorsement for the Rolleston West Project and the Company. It demonstrates that the Queensland Government shares State Gas' view that the area is highly prospective and capable of supporting new gas project development. State Gas' HDNG Facility will enable it to capture and commercialise production testing gas from these wells, thereby supporting the Frontier Grant Program dual objectives of increasing geological knowledge of the area and accelerating new gas supply to Queensland and the East Coast domestic gas market.
The Queensland Government's foresight in stimulating investment in increased natural gas supply, and continued support of innovation in the gas sector should be acknowledged. The State's objectives are consistent with those outlined in the Federal Government's recently released Future Gas Strategy report which identifies the critical role natural gas will continue to play in supporting an orderly transition to lower emission fuel sources over time."
*To view tables and figures, please visit:
https://abnnewswire.net/lnk/X03000O4
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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