Blue Energy Restarts Sapphire Gas Production as Petroleum Lease Discussions Continue

Blue Energy (ASX: BLU) has successfully reinstated production at its Sapphire coal seam gas (CSG) pilot program in Queensland’s Bowen Basin.

The Sapphire 6V well was offline during the June quarter after experiencing mechanical issues, including a down-hole pump blockage and a surface pump unit oil cooling fan failure, causing a halt in gas production.

After going through a dewatering process, Sapphire 6V has now commenced restricted production with a measured reduction of hydrostatic pressure on the producing coal seams so as to protect the reservoir.

Share Price Jump

Markets welcomed the news, with the Blue share price jumping 25% in early Thursday trade on the ASX.

Sapphire is widely considered an important distribution component for an east coast energy network desperately in need of additional gas supplies.

Work on the flanks of the Sapphire block has identified independently estimated reserves of up to 216 petajoules in an area that has links to key infrastructure and the local and national gas markets.

Blue has already signed a non-binding memorandum of understanding with QPM Energy to supply pilot gas to the Moranbah Gas Project via a proposed pipeline from the Sapphire location to the Node 3 compressor station within the Moranbah field.

Court Battle Win

Blue Energy is now powering ahead with its Sapphire development plans after it won a court challenge during the June quarter that had been drawn out for more than two years.

The company was also granted a decision by the state’s land court for the issue of an environmental authority over the area.

After having its ATP 814 exploration permit renewed for a further term and receiving two Potential Commercial Area licences over the Lancewood and Central blocks within the ATP 814 permit zone, Blue is continuing its discussions with Queensland officials to progress the granting of a petroleum lease over the Sapphire block.