Blue Energy seeks more gas contracts as progress continues on proposed new pipeline

Blue Energy BLU ASX gas contracts new pipeline December 2020
Blue Energy is continuing to engage with east coast gas buyers to increase its contracted sales volumes from its North Bowen Basin permit.

Gas play Blue Energy (ASX: BLU) heads into a new year looking to sign up more gas sales contracts for its Queensland acreage as well as reactivating its Northern Territory exploration.

Highlighted in the company’s December quarterly report was the non-binding supply agreement signed last month with electricity and gas supply giant Energy Australia that begins to lay the groundwork for a proposed pipeline to tap the resources of the Northern Bowen Basin.

When the pipeline is completed, Blue Energy would, under the proposed agreement, supply 10 petajoules (PJ) per annum for a contract life of 10 years.

At current gas prices, this equates to $690 million in revenue over the 10-year contract period.

This move came as the pace steps up on a plan to build a pipeline from the Northern Bowen Basin to the major Queensland gas hub at Wallumbilla with the state government backing a preliminary study and the federal government calling for development of the basin.

NT work in dry season

Blue Energy is moving toward reviving its work in the Northern Territory’s Beetaloo Basin after being granted additional suspensions of its work program and tenures in the light of restrictions to remote communities due to the COVID-19 dangers.

Recent drilling and testing results by key operators, including Santos Limited (ASX: STO) and Origin Energy (ASX: ORG), in the Beetaloo Basin  have continued to demonstrate the potential of Proterozoic rocks there.

Blue Energy is now moving towards regulatory approval of a regional seismic program at its EP 200, EP 205 and EP 207 permits.

“It is hoped community engagement activities will be able to be undertaken in the coming dry season,“ the company says in its quarterly report covering the three months to December 31.

Pipeline issue being pressed

Meanwhile, Blue Energy is continuing to engage with domestic east coast gas buyers to increase the contracted volumes from the company’s ATP814 North Bowen Basin permit.

The Queensland Government has undertaken the initial consultations with stakeholders regarding the feasibility of a pipeline from the North Bowen Basin to connect with existing east coast gas infrastructure.

Such a pipeline would mean that gas from that part of the basin could be fed into the east coast market.

“The next steps for the government are likely to be establishing terms of reference or scope for the external resources required to undertake the study,” the report notes.

That would be followed by the seeking of expressions of interest from external parties.

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