Brisbane-based Senex Energy has beaten nearly a dozen competitors for the right to spend $200 million to develop a new Queensland gasfield for the hungry east coast gas market.
Senex yesterday said it had won the Queensland government’s tender process over a block of coal-seam gas acreage in the state’s prolific Surat basin. In a first for the state, the acreage was designated as exclusively for supply into the domestic market.
The gas sales restrictions appeared to have little impact on interest in the field, with numerous parties including fertiliser group Incitec Pivot lodging tenders for the field. Senex’s winning bid will see it spend about $200m developing the field, including the drilling of about 100 wells across the project.
Senex managing director Ian Davies told The Australian the estimated 30 petajoules of gas per day that would come from the field represented about 20 per cent of the forecast gas demand shortfall.
The projected output will also broadly triple the total annual output from Senex, which already owns oil and gas fields in South Australia’s Cooper Basin as well as the Western Surat coal-seam gas project in Queensland.
“We’re local, we’re independent, and we add some competition and diversity to the market,” Mr Davies said.
“We’re also very motivated to develop as it’s material to us.”
The development of the new acreage will be underpinned by Senex’s existing $130m in cash reserves plus future revenue, although Mr Davies said the debt-free company would look into the merits of a “whole-of-company” refinancing early in the new year.
While Senex will be prohibited from selling any of the gas to Queensland’s three liquefied natural gas export plants, Mr Davies said he expected strong interest in the gas from local customers.
“There’s a thriving domestic market and there’s a shortage of available gas,” he said.
“If we’re able to reach the right agreement with the right customers, I think there’ll be a good quality return for Senex and a good deal for the customers.”
Incitec Pivot, which is a major industrial user of gas for the manufacture of fertiliser, had eyed the gasfield as a potential source of supply for its Gibson Island fertiliser plant, which risks closure if it cannot source affordable gas when its gas supply contracts run out late next year.
“We will continue to progress discussions with gas producers to seek an economic gas supply that will sustain Gibson Island and support the Queensland agricultural, resources and industrial markets,” Incitec Pivot chief executive Mr Fazzino said.
Queensland Resources Council chief executive Ian Macfarlane said the project would help increase gas supply into the east coast market.
“Once again Queensland is leading the way in securing Australia’s energy position by taking a proactive approach to energy prices by increasing supply with an Australian-only sale condition,” Mr Macfarlane said.
“This announcement demonstrates Queensland is getting on with the job of opening up new gas supplies while political interference in NSW and Victoria has completely stalled gas exploration.”
Yesterday’s announcement is the latest in a string of initiatives from Queensland gas companies in recent months aimed at boosting domestic gas, with the likes of Royal Dutch Shell, Origin Energy and Santos all unveiling new plans to unlock fresh sources of supply.
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