Senex Energy (ASX: SXY) has signed a domestic gas sales agreement with south-east Queensland manufacturer CSR (ASX: CSR), representing the company’s first domestic gas contract from its Atlas development.
Under the initial three-year contract, Brisbane-headquartered Senex has agreed to supply up to 3.25 petajoules of natural gas from its Atlas natural gas project in Queensland’s Surat Basin.
Commencing 1 January 2020, Senex will supply CSR subsidiary CSR Building Products with 0.65PJ of gas a year (1.95PJ in total), with CSR holding the option to extend the agreement by up to a further two years.
CSR will use the gas in its three south-east Queensland manufacturing plants that make PGH bricks, Gyprock plasterboard and Bradford insulation.
The plants employ 260 people at Brendale, Coopers Plains and Oxley.
Gas will be supplied at the Wallumbilla Gas Hub in Queensland at a fixed price in line with current market levels, indexed annually.
Senex managing director and chief executive officer Ian Davies said the company was proud to support local manufacturing, jobs and investment.
“Senex’s initial gas marketing focus is to partner directly with domestic commercial and industrial customers for long-term, enduring and mutually beneficial relationships,” he said.
“This agreement with CSR follows the Queensland Government’s policy to support new supplies of natural gas into the domestic market and this is a great outcome for Queensland.”
“This gas sales agreement is one of many milestones to come as we deliver our east coast gas development projects.”
The Atlas project, which has a 2P reserve position of 24 million barrels of oil equivalent, spans 58 square kilometres near Miles and Wandoan.
Senex received the environmental greenlight from the Queensland Government for the project last month.
Together, with satisfaction of federal environmental requirements, these approvals allow Senex to move to full development of Atlas.
The company is aiming to commission its gas facilities by the end of 2019, which will be followed by first gas sales to domestic customers.
Yesterday, Senex said it would start its Surat Basin natural gas drilling program next month after contracting experienced oil and gas services provider Easternwell.
Senex shares were unchanged at $0.355 at market opening.