Blue, Palisade to Market East Oz Gas

Sydney-listed Blue Energy has reached an initial deal to supply extra domestic gas to Australia’s North Queensland state.

The junior explorer has signed a memorandum of understanding (MoU) with Palisade Investment Partners, the owner of the North Queensland Gas Pipeline (NQGP), it said on October 8. NQGP, 391 km in length, pumps gas from the Moranbah gas project in the state’s Bowen basin to power and industry users in the town of Townsville. It is North Queensland’s only source of gas.

Under the signed document, Palisade will help Blue market gas from Blue’s Sapphire block in the Bowen basin, situated less than 2 km from the pipeline’s gas collection infrastructure. This will enable Blue to commercialise Sapphire’s resources, estimated at almost 216 petajoules of proven, probable and possible gas. The block also holds an additional 186 petajoules in contingent resources.

The Australian Energy Market Operator (AEMO) warned in late March that North Queensland and other east-coast states would face a gas shortage from 2024, stressing the need for faster development of resources.

“The development of new domestic gas supplies to North Queensland will deliver regional economic growth opportunities through new industries,” Blue chairman John Ellice-Flint said in a statement. He cited plans to build a $3bn 18 GWh lithium-ion cell manufacturing plant in Townsville, and the potential re-opening of a nickel refinery.

“Both projects will require substantial domestic gas supplies,” Ellice-Flint said.

The broader Northern Bowen basin area is estimated to hold around 15,000 petajoules of gas, of which Blue controls 3,248 petajoules. Under current market conditions, Blue said this 15,000-petajoule resource was enough to cover eastern Australia’s current demand for 30 years. Blue also noted it had secured government approval to carry out a survey for building a pipeline between Sapphire and the Wallumbilla connection near Rolleston.