The Blue Energy Ltd [ASX:BLU] share price is up today after the company signed a non-binding agreement with Energy Australia.
Blue Energy is an oil and gas explorer with projects in Queensland and the Northern Territory.
What’s the deal?
Blue Energy will supply 10 petajoules (PJ) of gas per year at the Wallumbilla gas hub for a period of 10 years from the company’s Northern Bowen Basin. This is the equivalent of 100 PJ to be delivered once the pipeline is up and running.
The gas for this deal would come from Northern Bower Basin’s ATP814 coal seam gas tenure. According to the company, the resource has 3,248 PJ plus there’s also 71 PJ of 2P reserves, and 289 PJ of 3P reserves nearby.
The company is quite upbeat about the deal, as this may only be the beginning, the first of many that will lead to gas from North Bowen Basin travelling into the east coast market.
As Blue Energy said, this is ‘a foundation volume that will contribute to the underpinning of the proposed gas pipeline from the North Bowen Basin into the Wallumbilla “Hub”, and for the development of Blue’s Bowen tenements.’
The government is promoting a gas-led recovery from COVID-19. The Queensland government is investigating the possibility of building a 500-kilometre gas pipeline connecting gas at Bowen Basin to the east coast market and investing $5 million on a pre-feasibility study. The Bowen Basin is one of Australia’s largest coal mining areas too.
Blue Energy’s Managing Director John Phillips said:
‘It is very encouraging to see that the acknowledgement by the Federal and Queensland Governments of the gas potential in the North Bowen Basin has given gas buyers the confidence to seek to secure long term gas supply agreements for gas from this under-developed producing basin.’
Blue Energy Share Price Soars by 46%
Markets have certainly taken the news well.
Blue Energy’s share price jumped 46% and is trading at 8.2 cents at time of writing. While there are predictions that there could be a gas shortage in the next four years in the eastern states, pressure is also mounting to replace fossil fuels with renewables.
Why not check out editor Greg Canavan’s free report ‘Five Bounce Back Stocks to Consider before the Market Recovers’ . You can access it here.