Ann: Gas flow-rates at 358k scft/day triggers a strategy review, page-3

Rougemont gas flow-rates at 358,000 scft/day triggers a review of
strategy
HIGHLIGHTS:
• Rougemont production testing well continues to demonstrate excellent gas production
• State Gas now pursuing rapid certification of reserves to underpin construction of gas
pipeline
• The Rolleston West Project (100% owned) is in a highly productive area, producing export
quality gas from the well-understood Bandanna coal measures
State Gas Limited (ASX: GAS) (“State Gas” or “the Company”) is pleased to advise that production testing
gas from the Rougemont2/3 lateral well (“Rougemont”) is flowing at a rate that is approaching being
unquestionably economic. It is producing in excess of 350,000 scft/day with the flowrate increasing at
between15-20,000 scft/day (see Figure 1 below), despite the top coals of the Bandanna coal measures
remaining underwater. If Rougemont gas production continues to increase at this rate it would justify
temporarily relocating the relocatable CNG project compression assets from Reid's Dome to Rougemont.
The advantages of such a move would be that the company would produce a positive cashflow from
otherwise flared gas whilst preserving the conventional gas at Reid's Dome as a quick response to what
should be an increasingly volatile domestic gas market following the closure of the Liddell coal fired power
station in April. Whilst such a move may cause a slight delay in the commencement of the CNG project, its
gas would still be available for the winter electricity needs following the Liddell closure.
The early success of the Rougemont Production Test means the company is evaluating the quickest
method by which it can get reserves declared at Rougemont to underwrite the financing of an approximately
20 km pipeline to a connection on the Wallumbilla to Gladstone Pipelines.
The options for a quick reserve certification range from a three to five well pilot scheme to pressure
monitoring wells or a combination of both. A decision on the precise next steps to be undertaken this dry
season will be made after discussions with the reserve certifier this month.
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Figure 1: Daily gas production
Figure 2: Relocatable Compression Station for Reid Dome CNG Project – can be repurposed to support CSG from Rolleston West
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Gas Rate (mscfd)
Water Rate (bwpd)
Rougemont 2/3 Pair Daily Gas Production (mscfd/day)
Gas Rate
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This announcement was approved for release by the Board of Directors.
FOR FURTHER INFORMATION
Richard Cottee
Executive Chairman
Phone: 0458 517 850
Email: [email protected]
Doug McAlpine
Chief Executive Officer
Phone: 0488 007 889
Email: [email protected]
www.stategas.com
ABOUT THE ROLLESTON WEST PROJECT
The Rolleston West Project (ATP 2062), is 100% owned by State Gas Limited and is directly adj