Senex Energy shares jumped almost 6% yesterday after it became the preferred tenderer for the first major gas project in the Surat Basin to produce for supply for domestic consumption only.
Queensland mines minister Anthony Lynham made the announcement to state Parliament yesterday, telling MPs it would generate about 150 jobs. The shares ended up 5.8% at 27 cents yesterday.
Senex now has to negotiate land access agreements and fulfil all existing environmental and native title requirements before work can commence.
Chief executive Ian Davies expects contracts and approvals will be obtained next year, ahead of supply in 2019.
Senex plans to invest more than $200 million to drill about 100 wells and build supporting infrastructure.
Dr Lynham said in his statement that producing more gas for the Australian market was important to ensure supply and keep prices stable as the fuel is crucial to many manufacturing businesses in Queensland.
Dr Lynham said he was pleased a Queensland company had been selected to deliver the gas pilot project to the Australian market.
"Around 150 jobs are expected to be created and Senex expects to invest over $200 million on wells and infrastructure over the project’s life," he said.
"Importantly this land is adjacent to existing gas infrastructure which will help to fast-track production from well head to market," he said.
"Senex must now negotiate land access agreements and fulfil all existing environmental and Native Title requirements before the Petroleum Lease is granted and work can begin.
"All going well, it is expected that gas from this project will become available to the local market within the next two years." A failed bidder in this process was Incitec Pivot (IPL) which revealed its hand in a statement to the ASX.
IPL said it participated in the Queensland Government tender process as the tender was seen as a pathway to securing economic gas for the long term sustainability of IPL’s Gibson Island Manufacturing Plant in Brisbane.
“The Gibson Island manufacturing plant is a critical asset for Queensland’s agriculture, resources and industrial value chains. This plant produces high analysis fertilisers and industrial chemicals for our agricultural, resources and industrial customers and is located close to customers in their regional footprint,” said Mr James Fazzino, IPL Managing Director & CEO.
“Gas is being supplied to Gibson Island under the existing gas contract that expires at the end of September 2018 and we will not give up on our Mission to Save Gibson Island.
“The IPL team will continue to investigate options to secure gas, including the proposed further Queensland Government Gas Tender with the Australian Market Condition announced by the Queensland Government in May 2017 which is expected to release a further 395 square kilometres of land. We will continue to progress discussions with gas producers to seek an economic gas supply that will sustain Gibson Island and support the Queensland agricultural, resources and industrial markets.”
