Blue Energy unveils significant Sapphire gas reserves and resources upgrade

Blue Energy (ASX: BLU) has welcomed the receipt of the results of an independent study which has led to a 36% increase in the estimated total proved and probable (2P) reserves in its Sapphire Block gas development in Queensland.

Conducted by respected international independent reserve and resource certifier, Netherland Sewell and Associates Inc (NSAI), the latest upgraded estimates of gas reserves and resources at Sapphire Block has seen an increase in 2P and 3P (proven, probable and possible) gas reserves of 36% and 13%, respectively, to 91 petajoules and 287 petajoules.

NSAI also confirmed an increase in 1C (low estimate), 2C (best estimate) and 3C (high estimate) contingent resource categories at Sapphire of 11%, 18% and 19%, respectively, to 171 petajoules, 251 petajoules and 256 petajoules.

The new assessment also provided a 16% increase in 3P+2C aggregate gas resource available to 543 petajoules of recoverable gas.

QPM sales agreement target

Blue Energy managing director, John Phillips, said the new assessment brings Sapphire 2P reserves to 80% of the total envisaged gas supply volume required under a non-binding MoU between Queensland Pacific Metals (ASX: QPM) and Blue Energy.

In June, Blue Energy signed a non-binding MOU with Queensland Pacific Metals Energy (QPME) to facilitate the supply of gas on an “as available” basis into the newly acquired Moranbah Gas Project (MGP) plant at Moranbah.

Mr Phillips said that the QPME transaction provides Blue Energy with a simple path to the commercialising of its pilot gas flow from the appraisal pilot well production testing activities currently being conducted in the 100% held Sapphire Block in ATP 814 (PLA 1034).

The Sapphire Pilot is located only 3 kilometres from QPME’s low pressure gas gathering system.

The MoU is the first step in a strengthening alliance between Blue and QPME for the development of gas reserves in the North Bowen Basin.

Blue and QPME’s parent company QPM have an existing MOU for the supply of 7 petajoules per annum of gas over 15 years to QPM’s Proposed Nickel Refinery in Townsville.

This is a separate MoU and remains on foot.

New results incorporated

NSAI incorporated new results in its study of the reserves for the Sapphire Block including updated data on coal overburden and coal net thicknesses from new pilot wells.

Regional geologic features were incorporated for more clarity, while gas content and recovery factor calculations were also adjusted for regional historical trends.

NSAI’s review also focused on the Sapphire pilot appraisal drilling program conducted in the last half of 2022.

Mr Phillips said Blue will continue to work with NSAI on the ongoing reserve upgrade process through the production testing program.

Origin Energy agreement extended

Blue Energy and leading Australian gas supplier Origin Energy (ASX: ORG) recently confirmed their intention to continue on with an existing non-binding, gas supply Heads of Agreement (HOA).

In March 2021, the two parties signed a HOA under which Blue Energy would supply up to 300 petajoules of gas to the Wallumbilla gas supply hub over a 10 year period.

The gas would come from Blue Energy’s Northern Bowen Basin ATP-814 coal seam gas developments.

Mr Phillips said the refreshed terms of this agreement reflects similar supply terms to the March 2021 agreement, with the potential upgrade to a future binding agreement requiring the construction of a Bowen Basin gas pipeline.