Highlights
- Strong operating performance with no lost time injuries.
- Production increase from 22.9TJ / day to current rate of ~27TJ / day.
- Growing electricity generation at Townsville Power Station (“TPS”)
- Construction of new tie in points to directly connect pre-mining gas drainage wells at the Grosvenor
and Moranbah North mines.
- 8 well drilling program, 100% funded under the Dyno Nobel Deferred Funding Facility, to commence
around April 2024.
- Developing further third party gas sale opportunities with industrial users in the Townsville region.
Queensland Pacific Metals Ltd (ASX:QPM) (“QPM” or “the Company”) is pleased to present an update for
wholly owned subsidiary QPM Energy (“QPME”) and the Moranbah Project.
Overview
In the 3 months since transfer of operatorship of the Moranbah Project, QPME hasfocussed on maintaining
safe and stable operations in parallel with implementation of a series of production optimisation and
improvement initiatives. Pleasingly, operating transition has been very successful with contract operator,
GR Production Services, establishing a strong management and operating team. A focus on implementation
of good gas field operating practices has delivered improved field performance with zero lost time injuries.
Furthermore, QPME has initiated a series of activities across the field with positive early results resulting in
steady production growth in line with QPME’s strategy.
Gas Production and Supply
Gas production and supply currently sits at ~27TJ/day. Highest daily production achieved to date was
27.4TJ, a 19.6% increase from the 22.9TJ/day rate at completion of the acquisition. Key activities that have
driven this increase are:
• Improved operating practices: QPME and GRPS have implemented a number of operating and
maintenance improvements which have led to increased well and compression availability;
• Well operating procedure: A new well operating procedure has been adopted, which together with
correct calibration of well control systems, has resulted in improved gas flow and well stability;
• Well workovers: In October, QPME commenced a work over program to return non-producing wells to production. So far 7 wells have been returned to production with post workover gas flow
rates above expectation. The first 4 wells have already added production of around 1.6TJ/day with
the next 3 wells in early stages of dewatering. QPME estimates that the cost of each workover will
be recouped in less than 2 months. The initial workover program targeted 10 wells which will be
completed by year end, however, given the success of the program to date, additional nonproducing wells have been identified and the program will be extended into 2024; and
• Third party gas supply: QPME has completed construction of 5 new tie in points which enable gas
produced by Anglo American (operator of the Moranbah North and Grosvenor underground
metallurgical steel making coal mines) to be connected into the Moranbah Project’s gas gathering
system. QPME and Anglo American have collaborated on locating these new tie points to ensure
waste mine gas produced during Anglo American’s extensive pre-mining drainage program at both
operations can be directly connected. QPME expects increased gas flow from these tie points as
new wells are brought on line by Anglo American over the next 6 months.
QPME is targeting further production growth through 2024 with contributions from continued well
workovers, increased third party gas supply and an eight well drilling program funded by Dyno Nobel under
the Development Funding Facility.
The wells are located in an area where Arrow drilled some highly productive wells in their most recent
drilling campaign. Design work for the program has been completed and an AFE for procurement of long
lead items has been approved for funding by Dyno Nobel. The program is expected to commence in April
2024 and be completed by November 2024.
Electricity Generation
The increase in gas supply has allowed QPME to run TPS more frequently, generating and dispatching more
electricity. Initially, due to limited gas supply, QPME dispatched TPS in open cycle mode, using the 160MW
gas turbine. During November, QPME has increased gas production sufficiently to commence operation of
TPS in combined cycle mode, utilising the gas turbine and the 82MW Heat Recovery Steam Generator.
As the transition from spring to summer weather patterns progresses, Queensland electricity market prices
and volatility are increasing. The combination of TPS generation capacity and the gas storage available in
the North Queensland Gas Pipeline allows QPME to capitalise on this volatility. For example, on 16th
November, one such event occurred and TPS generated $551,422 of revenue including $175,164 during a
5 minute interval where prices reached $9,810/MWh (unaudited).
Third Party Gas Sales Market Development
In addition to supplying gas to the TECH Project, QPME is seeking to expand its’ customer base. Based on
production growth already achieved and further increases expected through 2024, QPME has started to
develop opportunities for additional third party sales.
These opportunities are focussed on gas supply to industrial users and increased peak electricity generation
capacity through establishment a low emissions Energy Hub at the TECH Project site in Lansdown. The
Energy Hub will facilitate significant de-risking of gas supply to the TECH Project through accelerated
development of gas and energy infrastructure as well as facilitate gas supply to third party customers in the
immediate term.
At the Energy Hub, QPME will seek to assess and establish:
• Compressed natural gas (“CNG”) supply: QPME already has strategically purchased high quality,
second hand CNG equipment.
• Liquified natural gas (“LNG”) supply: QPME’s contract operator GRPS has undertaken significant
feasibility work with regards to micro-LNG.
• Hydrogen-ready firming power supply: Gas turbines that can also use hydrogen fuel can be
established at Lansdown to supply the peaking electricity market and also ultimately provide power
to projects within the Lansdown precinct.
QPME has already executed a Memorandum of Understanding regarding working together to establish gas
supply from QPME with:
• Ravenswood Gold for its Ravenswood Gold mine; and
• Agripower for its silicon fertiliser project in Charters Towers.
Comments
QPME CEO David Wrench commented,
“ We are delighted with the way our acquisition of the Moranbah Project and transiton to operatorship has
progressed over the last 3 months. The rapid turnaround in production we have seen has validated our
operating strategy and has identified further upside as we build a profitable energy business.”
This announcement has been authorised for release by the Board.
