Blue Energy closer to gas well appraisal drilling at Sapphire Block as east coast energy supply crisis intensifies

Blue Energy ASX BLU North Bowen Silver City Drilling natural gas Galilee Basin
Blue Energy says its upcoming appraisal program at the Sapphire Block is “vital” to establish new gas supplies for the east coast market, which is in crisis.

As Australia’s east coast energy supply crisis intensifies, Blue Energy (ASX: BLU) has completed civil works for its natural gas well appraisal drilling program at the Sapphire Block within ATP 814 in Queensland’s North Bowen Basin.

Civil works included installing well pads and cellars for vertical and lateral wells. Silver City Drilling has been contracted for the appraisal program and a rig is due on site by the end of the month.

The upcoming program is designed to convert gas resources to reserves from existing inventory in the Sapphire Block (PL 1034).

Building 2P gas reserves and establishing flow capacity will underpin existing supply agreements with EnergyAustralia and Origin Energy (ASX: ORG).

Netherland Sewell and Associates Inc (NSAI) has assisted Blue in designing the drilling program and will certify its gas reserves.

According to Blue, NSAI carries out certification for all major coal seam gas and liquified natural gas producers in the Surat and Bowen basins.

Blue describes NSAI as a global top tier independent certifier.

ATP 814

Blue wholly-owns ATP 814, which has current 2P reserves of 71 petajoules and 3P reserves of 298PJ.

The company says there is “significant upside” within the permit with combined contingent resources in the area of 3,248PJ.

“There is also additional upside in the prospective resources category in ATP 814 of approximately 2,000PJ of gas in place,” Blue added.

ATP 814 is directly adjacent to Arrow Energy’s Moranbah operation, which is one of the oldest gas fields in Australia and geographically, the country’s largest.

With an established gas field next door, Blue has the advantage of proximity to infrastructure and customers.

East coast gas crisis

Blue says its appraisal program at the Sapphire Block is “vital” in establishing new gas supplies for the east coast market, which will ease pressure on both supplies and pricing.

The company plans to develop its gas resources at ATP 814 for the domestic gas market and already has supply agreements in place for 400PJ.

A further 2,500PJ of gas resources in its North Bowen Basin acreage remain uncontracted.

The Wallumbilla daily spot gas price is currently $33.58/GJ, and the Australian Energy Market Operator (AEMO) has capped gas prices at $40/GJ.

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