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State Gas to commence gas sales with trucking of CNG

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World Coal,

In response to the predicted domestic gas shortfall, State Gas Ltd has initiated a project to undertake trucking of CNG to enable commencement of gas sales from its Central Queensland projects within months.

Under the CNG trucking project, gas from the company’s 100% owned Reid’s Dome Project (PL231) will be compressed and then trucked by road approximately 60 km to a delivery point accessing the high-pressure gas infrastructure network, thereby creating a ‘virtual pipeline’ for the gas.

Initial gas sales will be to the domestic spot market, taking advantage of the unprecedented prices currently available and responding to the national need.

Deliveries will initially be sourced from the established conventional gas resource in the northern area of PL231. This Reid’s Dome gas is immediately available and of pipeline quality, and requires only dehydration to meet pipeline specifications.

Gas was first discovered at Reid’s Dome in 1954 when there was no market for the gas, and no pipeline or other techniques available to transport the gas.

State Gas has sourced compression and transportation equipment to enable sales of approximately 1 TJ/d. Commencement of sales is targeted for early 1Q23.

In the USA, CNG has historically been used onshore for gas supply over distances up to 800 km.

The CNG trucking project will facilitate early gas sales to generate revenue for State Gas and help meet the current market shortfalls, while work continues for a larger capacity ‘in-ground’ export pipeline. On ground survey work to refine the preferred pipeline route is currently being planned, prior to seeking the requisite approvals.

Once the ‘in-ground’ pipeline is complete, the virtual pipeline system can be redeployed to enable the commercialisation of otherwise stranded gas, or sales of production test gas from the company’s projects.

Richard Cottee, Executive Chairman, State Gas, comments:

“I am particularly pleased to be announcing this project at this critical time. State Gas was established to be an alternative supplier bringing new, undeveloped gas resources into the constrained East Coast market. With this project we are bringing this ambition to reality.”

“Not only are we fulfilling an ambition, but doing so at a time of great need for gas, as highlighted by the ACCC report on the gas market released this month. The ACCC found in its latest gas report that the outlook for the east coast gas market has significantly worsened, with an expected shortfall of 56 PJ in 2023.”

“In addition, the CNG project will generate first revenues for the company, helping to underwrite further development and expansion.”

Cottee further noted that spot gas prices at Wallumbilla averaged US$27.31 over the June 2022 quarter.

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