Gas Week

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Reserves of 224 petajoules in Queensland; Sunshine contracting gas at low prices to gain support for its development

Posted by gasweek on 25 September, 2007

Coal-seam methane explorer Sunshine Gas plans to be in commercial production within 12 months after confirming reserves of 224 petajoules at its Lacerta project in Queensland, according to The Australian Financial Review (8/8/2007, p. 52).

Shortest time to go from first discovery to certified reserves: The company began drilling on its leases near Roma lasts year, and expected to start work on production facilities by the end of October, managing director and founder Tony Gilby said. “It’s the shortest time that someone’s gone from the first discovery well to certified reserves,” Gilby said. “We have the reserves and we have a clear path to production.”

Third largest market capitalisation: Sunshine has the third-largest market capitalisation of Australia’s independent coal-seam producers, behind Queensland Gas Co and Arrow Energy. It has been able to learn from these companies, two of Australia’s best performing stocks, which are producing gas from similar goal seams to the east of Lacerta, on the other side of the coal-rich Surat Basin. “QGC and Arrow started corporate life two to three years before us,” Gilby said.

Sunshine to sign sales deals once it is ready to deliver: Sunshine had been able to avoid the path those companies took of contracting gas at low prices to gain support for development, he said. Sunshine plans to sign sales deals for its gas once it is close to being ready to deliver the fuel. Liquefied natural gas plants at Gladstone that Arrow and Santos were planning to build also supportedd the outlook for prices, he said. “That will add to the tightening of the market,” he said.

Sunshine aiming to install gas-fired power station near Lacerta: Sunshine is also aiming to install a gas-fired power station near Lacerta, to generate income from the gas it is producing for the reserves certification, which is currently flaring. Sunshine was now looking at using the same technique as Queensland Gas, which was likely to yield higher production rates, Gilby said. The proved, probable and possible reserves at Lacerta are now 895 petajoules, while proved and probable reserves, which are the standard of certainty required to support sales contracts, are 224 petajoules.

The Australian Financial Review, 8/8/2007, p. 52

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