Got it...THE HYSTERIA that is surrounding the...

Got it...

THE HYSTERIA that is surrounding the multibillion-dollar wave of international investment in Queensland's burgeoning coal-seam gas (CSG) sector has caused the state's conventional oil and gas reserves to be well and truly forgotten by most. But not by junior producer Mosaic Oil, which hopes to cash in on the lack of interest with what it believes is a bargain buy. Mosaic has paid $7 million to buy out its partner in the Churchie oil and gas field, Adelaide-based Santos. Mosaic estimates Churchie is generating $500,000 to $600,000 in revenue a month and says moving to complete ownership will finally allow the field's full development, something that was forsaken while Santos was distracted by its bigger coal-seam gas interests. Mosaic also has its eye on an alternative way to profit from coal-seam gas, by using its depleted gas reservoirs as enormous storage facilities for that industry. Producers will need somewhere to park the resource while CSG-fed liquefied natural gas plants are ramped up. Enter Mosaic. "We've got established production, which is increasing, good-quality reserves of gas and liquids that we're commercialising; we're going to proceed with the full field development of Churchie, and we've got a potential business opportunity on the storage," company deputy chairman Andy Rigg says. The storage scenario has caught the eye of Royal Bank of Scotland analyst Chris Brown, who's also interested in the considerably lower price Mosaic paid for its conventional gas reserves, compared with recent coal-seam gas deals predicated on a forecast long-term rise in domestic gas prices. He notes Mosaic has 46 years of production from proven and probable reserves at current rates.