Metgasco to extend Casino-Ipswitch gas pipeline

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 5 -- Sydney-based coal seam methane explorer Metgasco Ltd. is planning to extend its proposed 140 km Casino-Ipswitch gas pipeline further north to BP Australia's refinery on the Brisbane River. The pipeline previously was designed to deliver gas from the Casino area in northern New South Wales to CS Energy's Swanbank power station near Ipswitch, Queensland.

The extension results from a tentative 15 petajoules/year (about 14 bcf/year) gas supply deal with BP to supply the latter's Brisbane refinery. This contract follows an 18 petajoules/year (16.7 bcf/year) contract signed last year with Queensland-owned CS Energy.

Metgasco says the higher volume through the line will improve the economics of the entire project.

The new schedule allows for another 30 months to complete environmental approvals and an additional 8 months for construction of the pipeline. If the timetable holds true, first gas would flow north towards the end of 2010.

Metgasco (formerly Methane Gas Co., formed as a private syndicate of geologists in 1997) is working in the Clarence-Moreton basin coal fields near Casino.

Metgasco's immediate priority is to increase its 2P gas reserves from the 194 petajoules (180.4 bcf) announced in September to 660 petajoules (614 bcf) by mid-2008. The company's drilling contractor, Vectra, is working on ways to improve horizontal drilling techniques in the coal seams and speed up completion times with the aim of bringing on stream as many as 40 wells each year.

Part of the earlier agreement with CS Energy includes CS Energy's paying some of Metgasco's exploration and development costs in return for interests in some of the company's fields.

The BP deal includes BP's aid in feasibility studies for the pipeline extension. At the moment BP is supplied with gas via the Roma-Brisbane pipeline, which transports gas mostly derived from conventional fields owned by Santos and Origin Energy in the Surat basin.

BP uses the gas for power generation at the refinery, but has been seeking a second source of supply to maintain its energy security.

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