I have posted an old announcement below explaining the deal...this came after they sold 50% of the tenement to CS energy. The contract required certification that 60-90 PJ of energy could be supplied over 15 years from the Bernwyndale holding...subject to certification. This came through last week and from what I can tell only 15 PJ has been proved, with 64.9 BJ is probable. A few things could have happened, CS energy may not have been willing to invest more when the 60-90 could just be covered by PROBABLE reserves let alone proven reserves. Alternatively, QGC may need the gas from Bernwyndale to ship - via a pipeline that was approved last week - to fill both the Incitec contract (74 PJ over ten years) and to fuel the 4PJ/year power plant they plan to build. The Argyle plant has only 8.7 PJ proven and 58.7 probable...not enough to cover the contract let alone the proposed power station. Of course more reserves could be proven through drilling. However, a recent report into Berwyndale didn't increase the PRoven reserves as much as was hoped I suspect. The other thing that worried me is the financing of the proposed power station...the CS deal would have done a lot to reassure investors about giving such a big loan to a small company like QGC for its Argyle based power plant.
While the gas reserves are still large, I think it is fair to say that QGC prospect are dimmed, at least in the medium term, by the recent announcements (both the CS energy deal and the small upgrade in possible reserves)...investors may have to wait longer...but then again if they do get the power plant built they will have more gas of their own to burn.
Hope this make sense...have looked through past announcement peicing it together...any correction are welcome.
QGC
queensland gas company limited
