Blue Energy well appraisal program underway, with first well spudded today at Sapphire Block

Blue Energy ASX BLU North Bowen Pilot spud gas Sapphire
Blue Energy’s well appraisal program at the Sapphire Block aims to convert gas resources to reserves.

Blue Energy (ASX: BLU) is poised to spud Sapphire 5V, which is the first well of its appraisal program at the Sapphire Block in its ATP 814 permit in Queensland’s north Bowen Basin.

The company expects the Silver City Drilling rig 23 will spud the well this afternoon.

Sapphire 5V will be drilled as a vertical well. It is designed to be the water aggregating and water producing well for the multiple lateral wells within the Sapphire 5 pilot cluster.

Blue noted each of the subsequent lateral wells will be drilled for a specific coal seam. This will comprise up to four lateral wells.

Geological control for the Sapphire 5V pilot cluster was obtained from the Sapphire 1 and Sapphire 2 core holes and reprocessed 2D seismic data.

According to Blue, there is up to 20 distinct and correlateable coal seams in the Sapphire field, which Blue has identified in previous drilling with up to 17 cubic meters per tonne of gas.

Gas supply agreements

The program at Sapphire Block aims to convert gas resources to reserves, along with establishing flow capacity to shore up existing supply agreements with EnergyAustralia and Origin Energy (ASX: ORG).

Blue has 10 year agreements with Origin and EnergyAustralia to supply up to 400 petajoules of gas at Wallumbilla for the domestic market.

The company has a further 2,500PJ of gas resources for ATP 814 that remain uncontracted.

All-up ATP currently has 2P reserves of 71PJ and 3P reserves of 298PJ, with contingent resources of 3,248PJ.

The Sapphire 5V pilot cluster is about 2km from Arrow Energy’s Moranbah gas operation, which is one of Australia’s oldest gas fields. It is also Australia’s largest gas field.

East coast gas market

Blue expects its appraisal program will result in new gas supplies for the east coast market, which is facing an energy crisis with rocketing prices amid a global supply shortage.

Last month, the Australian Energy Market Operator (AEMO) took control after five states were deemed at risk of widespread blackouts.

AEMO then lifted its suspension nine days later but said it expected “conditions to remain dynamic”.

The Wallumbilla daily spot gas price is currently sitting around $41.28/GJ – up from less than $14/GJ in April.

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