Blue Energy

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As the world moves towards cleaner energy and governments negotiate new targets for power generation, one company strives to become to become Australia’s leading mid-sized coal seam gas (CSG) exploration and production company with gas reserves in excess of one trillion cubic feet of gas within five years.

Blue Energy Limited, a growing energy exploration company headquartered from Brisbane, Australia, has a strong collection of CSG assets located in Queensland, Australia, and an asset base of eight CSG-operated petroleum exploration permits.

Blue Energy also has interests in conventional assets in the Cooper/Eromanga Basin, Australia as well as offshore Papua New Guinea. “Our main focus is on CSG and the exploration and development of our CSG acreage, of which we have in excess of 22,000 square-kilometres,” says Peter Cockcroft, Executive Chairman at Blue Energy. “We are currently undertaking significant work programs in both the Galilee basin (ATP813P) and northern Bowen basin (ATP814P).  It is within these areas that we see the future for Blue Energy,” says Cockcroft.

The Galilee basin and north Bowen basin

Blue Energy’s 100 per cent-owned Galilee basin project presents the perfect place for the company to begin its mission. It is situated adjacent to Arrow Energy’s Moranbah Gas Project where recent results on the Monslatt block have proved very promising. Other existing wells include the Rodney Creek wells, Lake Galilee 1, Splitters Creek 1 and Thunderbold 1, making this somewhat of a CSG hotspot.

“We are currently awaiting our first resources estimate in the block from reserve certifiers NSAI.  This is expected shortly,” Cockcroft says.

“We are looking at various commercialisation strategies for this block and depending on the resource base that is assigned by NSAI could include gas export to LNG market or local electricity generation. The Galilee basin has a longer term focus due to its location.”

Cockcroft notes the several CSG operators currently in operation in the locality and says that this basin has the potential to support several large export LNG projects.

Equally well positioned is Blue Energy’s northern Bowen basin project; another 100 per cent holding for Blue Energy. In fact, bar its Maryborough acreage, the company holds 100 per cent of each of its CSG assets. Amidst the northern Bowen basin project, there are nine disconnected sections of blocks covering the areas of known coal mining and CSG operations. Initial geographical study of this location has identified a number of potential CSG targets. This is another project which enforces the prime real estate Blue Energy holds within this Queensland region. Additionally, the company has its interests in four conventional permits near the north-western boundary of the Cooper Basin within the Eromanga Basin, Queensland, and four offshore Petroleum Prospecting Licence’s (PPL) in the Gulf in Papua New Guinea to consider.

“The offshore area in Papua New Guinea is a frontier basin play and is what I call the geologist’s dream and the manager’s nightmare,” Cockcroft says.

“It’s an area which has little geological or seismic control and high risk. It’s offshore, in deep water and is a new geological concept for this area. It’s what every geologist wants: an untouched basin.”

As the company spreads into international locations, it is ever supported by this bountiful Queensland-based portfolio.

Blue Energy, KOGAS and 2010

On May 29, 2009, the Korean Gas Corporation (KOGAS), plans to invest in Blue Energy. KOGAS, the world’s largest LNG importer, executed a Heads of Agreement with Blue Energy as a first step toward the formation of a strategic partnership. Under this agreement KOGAS was able to acquire a 10 per cent equity stake in Blue Energy through a private placement, and was granted an option to farmin to the Galilee Basin and Northern Bowen Basin projects. “Signing of the HOA with KOGAS is a significant achievement for Blue Energy,” Cockcroft told press. “It is confirmation of the confidence in the company’s strategic direction, the quality of our assets and the expertise of our people.”

This HOA enabled Blue Energy to affirm delivering on its short term domestic gas and medium term export market strategies, including achieving its first gas reserve certification in the second quarter of 2010. As that moment approaches, Cockcroft says that there are two tiers to Blue

Energy’s strategic goals going forward.

“If you look at identifying risks we are a small company captive to a low domestic market gas price. So, how do we go around that?” he questions. “We attempt to mitigate the gas price risk by diversifying or building competency here and taking that model elsewhere where there is a more favourable gas price environment. I think the Arrow model (with the Moranbah Gas Project) is potentially a good one to try and emulate.”

This year began strongly for Blue Energy after drilling on the company’s Monslatt 1,1A, 2 and 3 wells in December 2009 and January 2010 achieved very positive results. This prompted the next step and on February 26, the company announced that its board had approved to undertake an accelerated appraisal drilling program in the Monslatt area, involving up to 15 stratigraphic and core wells and a number of pilot production wells. Blue Energy continues to execute its drilling program and in light of these promising results its Queensland CSG stronghold looks set to treat the company extremely well.

www.bluenergy.com