Blue Energy (ASX: BLU) has welcomed a government concept study that endorses a gas pipeline from Moranbah in Queensland to the east coast interconnect and development of the Bowen Basin gas province.
Queensland’s Bowen Basin is where Blue operates the Moranbah gas project which hosts 3,000 petajoules of gas in resources and 2P reserves.
The federal and Queensland governments undertook the study, which concluded there was a “clear need for additional gas production capacity” by developing new basins.
Another key finding was that the Bowen Basin was in a prime position for development and to feed gas to Australia’s east coast market.
The positive government study drove Blue’s share price up more than 24% to a high of $0.058 in morning trade.
Blue managing director John Phillips welcomed the report saying it was “very encouraging” both the federal and state governments supported the company’s theory that the Bowen Basin offers a “clear short-term solution” to the east coast gas supply crisis.
“[Bowen Basin] provides a de-risked new gas supply basin, which has large-scale volumes, which have been on production for over a decade (and therefore de-risked), and which principally only requires the construction of a pipeline to initiate significant gas development.”
Mr Phillips added both the pipeline and gas field developments will deliver hundreds of jobs during construction and during operation.
“This, in Blue’s view, is a nation building piece of infrastructure, which will secure long-term gas supply for domestic gas users, plus royalties for the state government and its citizens for decades to come.”
Advancing Bowen Basin gas project
Blue wholly-owns the ATP814 project area in the north Bowen Basin.
The company says planning for appraisal drilling at the project is “well advanced” and anticipates a production licence soon for the Sapphire block within the project.
Drilling is scheduled to begin mid-year and is designed to build the 2P reserve base and confirm modelling to deliver gas under its previously announced supply agreements with Origin Energy (ASX: ORG), Energy Australia and QPM.