Blue Energy inks pipeline deal to bring domestic gas to North Queensland market

Blue Energy ASX BLU North Queensland gas pipeline domestic Palisade Investment Partners
Blue Energy has inked a deal with North Queensland Gas Pipeline owner Palisade to bring gas from its Sapphire Block to the North Queensland domestic market.

Junior oil and gas explorer Blue Energy (ASX: BLU) has signed a deal with pipeline owner Palisade Investment Partners to facilitate bringing new gas supplies to the North Queensland domestic market.

Palisade is the owner of the North Queensland Gas Pipeline (NQGP), a 391km onshore natural gas pipeline that transports gas from the Moranbah gas project in the state’s Bowen Basin to power and industrial users in the town of Townsville. It is North Queensland’s only source of natural gas.

As part of a newly inked memorandum of understanding, Palisade will assist Blue in marketing the Northern Bowen Basin gas reserves in the explorer’s Sapphire Block, which lies less than 2km from gas field gathering infrastructure within the pipeline system.

This is expected to facilitate the development of Sapphire’s reserves, which have been independently assessed to contain almost 216 petajoules of 3P (proven, probable and possible) reserves plus a further 186PJ of contingent resource.

In addition, the broader Northern Bowen Basin Province has been estimated to hold about 15,000PJ of gas, of which Blue owns 3,248PJ.

Based on current market conditions, Blue said this 15,000PJ is equivalent to 30 years of gas supply for eastern Australia at current demand.

Regional growth opportunities

Blue chairman John Ellice-Flint said the deal with Palisade would enable the delivery of new, “affordable” domestic gas to North Queensland along with “regional economic growth opportunities through new industries such as the Imperium3 Townsville consortium’s proposed $3 billion 18 GWh lithium-ion battery cell manufacturing facility.”

Imperium3 Townsville recently completed a feasibility study for the proposed facility and has submitted it to the Queensland government.

“With the potential re-opening of Queensland Nickel at Yabulu in Townsville, both projects will require substantial domestic gas supplies,” Mr Ellice-Flint added.

“Thousands of new jobs in North Queensland depend on reliable and affordable domestic gas supplies over the next 30 years and Blue Energy is determined to play a major role in supplying domestic gas to meet this demand,” he said, noting that the royalties paid on domestic gas production would flow to the state government.

Blue’s agreement with Palisade also seeks to obtain access to the existing Moranbah gas project, jointly owned by AGL Energy (ASX: AGL) and Arrow Energy, and associated gas processing facilities.

In today’s announcement, the explorer also confirmed it has received government approval for a pipeline survey licence from its Sapphire Block to the Wallumbilla connection near Rolleston and is still progressing this southern pipeline route option.

By afternoon trade, Blue shares were up 18.92% to $0.044.

Danica has extensive experience writing and editing business news in the Oceanic and Southeast Asian regions. She has written across a range of industries including oil and gas, mining, energy, science and research, retail and travel. Danica has covered small and large cap companies listed on the Australian, Singapore, Hong Kong, Indian, London and Toronto exchanges.