Vintage Energy powers ahead to supply east coast market with first gas from Vali field in October

Vintage Energy ASX VEN Vali gas June 2022 quarterly
Vintage Energy expects to produce first gas from its 50%-owned Vali field in October to meet critical east coast demand.

The June quarter was a “highly significant period” for Vintage Energy (ASX: VEN) as it gears up to produce first gas from its Vali field in Queensland’s Cooper Basin.

Commenting on the progress during the quarter, Vintage managing director Neil Gibbins said the company was now fully resourced for the remaining work required to begin producing and supplying gas from the Vali field to the east coast market.

“Operations on the ground are advancing with the completion of stimulation operations and the commencement of well completions.”

He said the company’s plans for the September quarter would see the field connected, construction advanced to the point where commissioning begins.

First gas from the field is targeted for October.

The Vali field is located on ATP 2021 and holds gross proved and probably reserves of 101 petajoules.

Vintage is operator and owns 50% of the field, with Metgasco (ASX: MEL) and Bridgeport holding 25% each.

AGL supply contract

During the quarter, Vintage and its joint venture partners received $15 million in pre-payments via three $5 million tranches under a gas sales agreement with AGL. Vintage’s share of the pre-payments was $7 million.

AGL inked a binding agreement in March with the joint venture to purchase between 9 petajoules and 16PJ of gas from the field over 4.5 years.

Vintage also completed a $10 million debt facility.

Odin gas field

Adjacent to Vali is the Odin gas field, which is located on PRL 211 in the South Australian Cooper Basin.

Odin is owned under the same joint venture terms as Vali.

The Odin-1 well will be completed along with the Vali field wells in the current campaign.

Mr Gibbins said the joint venture would be looking to bring Odin online “as soon as practicable”.

The joint venture plans to connect the Odin field to the Vali-Beckler pipeline and is preparing a commercial plan for marketing its gas.

Odin has gross 2C contingent resources of 36.4 billion cubic feet.

“The Odin gas discovery could be brought online in 2023, subject to the outcome of the concept engineering work about to commence and project gateways and work,” Mr Gibbins said.

Other assets

In addition to its Cooper Basin assets, Vintage is also progressing other projects.

In the South Australian/Victorian Otway Basin, Vintage operates and holds a 50% interest in PRL 249, with Otway Energy owning the other 50% stake.

The permit contains the Nangwarry gas field, which has the potential to provide a reliable supply of raw gas for the production of food or industrial grade carbon dioxide.

Nangwarry contains 12.9 billion cubic feet of carbon dioxide under the best net on-block recoverable sales gas.

Its best hydrogen net gas contingent resources are estimated at 0.8Bcf.

Testing of Nangwarry-1 produced raw gas containing 93% carbon dioxide, 6% methane and 1% nitrogen.

Vintage noted naturally occurring carbon dioxide resources are needed for a range of sectors including hospitality, food and beverage manufacture, horticulture, chemical, cold storage, medical devices and other manufacturing.

During the June quarter, Vintage progressed discussions with stakeholders to identify solutions that would enable commercialisation of the field.

Adjacent to Nangwarry on the onshore Otway Basin is PEP 171. Vintage owns 25% of the permit, which is prospective for gas in the Penola Trough.

A 3D seismic survey is planned for the permit in FY2024.

In the Galilee Basin, Vintage holds a 30% interest in joint venture with Comet Ridge, which operates the asset through its 70% stake.

The joint venture is awaiting approval on applications for potential commercial areas covering the prospective areas of the permits. The approval is expected in the first half of FY2023.

Vintage wholly owns EP126 in the Northern Territory’s Bonaparte Basin. No work was carried out at the permit during the June quarter.

East coast gas market

The east coast market is embroiled in an energy crisis.

To avoid further pain, an ACCC January report said more gas will need to flow from Queensland to feed the southern east coast states.

Additional supply has been deemed critical to mitigate shortfalls predicted to continue in 2023 and beyond.

“At a time when there has never been a greater need for new sources of gas supply, Vintage is poised to enter the market as a fully-funded gas producer with contracted supply, uncommitted reserves and work afoot to bring additional supply to market from a second field,” Mr Gibbins said.

“To this end, our focus in the coming months is taking Vali safely to first gas in October and getting the work done to take Odin to the point where formal engineering and design and investment decisions can be made,” he added.

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