Pipeline MOU with APA could see Galilee take Glenaras gas to supply-constrained east coast markets

Galilee Energy is busy opening doors to the potential commercialisation of one of the largest uncontracted gas resource positions on Australia’s east coast.

Galilee Energy (ASX:GLL) has negotiated a non-binding memorandum of understanding (MoU) with leading Australian energy infrastructure provider APA Group (ASX:APA) that could potentially link up Galilee’s Glenaras gas project with the gas-short east coast markets.

APA – which has a portfolio worth $21 billion of gas, electricity, solar and wind assets – delivers around half of the nation’s gas usage.

“The non-binding MoU with APA is another step forward in the potential path to commercialising our extensive gas resource in the Galilee Basin,” Galilee Managing Director David Casey said.

APA envisages potentially building a pipeline from the Glenaras project to the Cooladdi compressor station on the South West Queensland Pipeline (SWQP), which APA owns and operates and is located about 420km south of the project area.

The SWQP connects the Moomba gas hub in north east South Australia to the Wallumbilla Gas hub, allowing bidirectional flow of gas between Queensland and southern markets via the Moomba to Sydney Pipeline and the Moomba to Adelaide Pipeline System.

At Ballera, there is a connection to the Carpentaria Gas Pipeline which supplies gas to Mount Isa.

Australia could be staring down the barrel of a gas shortfall 10 times what it was a year ago, according to the Australian Competition and Consumer Commission, with the east coast taking the brunt of the shortage.

And Galilee is one of the closest to being able to help provide some relief, having made strides in advancing its Glenaras coal seam gas (CSG) project in Queensland.

The Glenaras project has one of the largest certified, uncontracted contingent resource positions on the east coast of 2,508 petajoules of gas. Galilee’s immediate focus is on converting this contingent resource to a maiden reserve.

“As a leading Australian energy infrastructure business, APA’s east coast gas grid plays a critical role in potentially enabling the flexible and safe transportation of natural gas, which is why APA is a compelling fit with Galilee’s strategy to develop Glenaras in a sustainable manner,” Casey said.

“Giving potential gas customers confidence in the deliverability of gas from Glenaras is incredibly important.”

Casey noted that potentially connecting the Glenaras project to the SWQP and the multiple links into pipelines interstate would add optionality to discussions with gas customers and could expand the commercial opportunities available to the company.

“Together with the project’s maiden reserve certification due in early 2023, continued planning on gas pipeline infrastructure could help provide a solid basis for progressing future gas sales agreements,” he said.

This article was developed in collaboration with Galilee Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.