AGL invests $37m in Qld gas exploration Email Print Normal font Large font July 11, 2008 - 10:33AM
Advertisement AGL Energy Ltd (AGL) has invested $37 million in a coal seam gas production pilot and exploration and appraisal program with Galilee Energy Ltd in Queensland's Galilee Basin.
Brisbane-based Eastern Corporation Ltd is the majority owner in Galilee Energy.
The farm-in agreement, between AGL and two of Galilee Energy's wholly-owned subsidiaries, will see AGL investing up to $37 million over two stages to acquire a 50 per cent interest in exploration tenement ATP 529P, Australia's largest gas and electricity supplier said.
"Stage 1 of the program will involve the Rodney Creek production pilot in ATP 529P at a cost to AGL of $20 million," it said.
Work on Stage 1 is expected to commence by November 2008.
"Stage 2 will involve an exploration and appraisal work program during FY10 and FY11 at a cost to AGL of $17 million."
The parties have also entered into a 10-year gas marketing agreement, AGL said.
Under the terms of the agreement, AGL will assume operatorship of the joint venture under a Joint Operating Agreement.
AGL managing director Michael Fraser said the farm-in agreement is a further step in growing AGL's gas reserves through targeted exploration and appraisal drilling.
"AGL is pleased to be working with Galilee Energy in developing the Galilee Basin," he said.
"This transaction provides Galilee Energy certainty for the next stage of development to prove up reserves, and provides a joint venture partner in AGL who has the capabilities to develop and commercialise gas discovered in the Galilee Basin."
AGL has already commenced an investment program to explore and develop a significant coal seam gas resource in the Macarthur region.
The Camden Gas Project is a joint venture between AGL and Sydney Gas Ltd, located 50 kilometres southwest of Sydney and it has been producing gas for the Sydney market since 2001.
Earlier this week, AGL also announced it will buy a stake in geothermal exploration company Torrens Energy Ltd, potentially expanding its renewable energy portfolio to include power generated from hot rocks.
AGL will pay $2.2 million for a 9.99 per cent stake in Perth-based Torrens.
