Eastern Star Gas Managing Director David Casey said that the gas sale to ERM would be the first commercialisation step for the Narrabri Coal Seam Gas (CSG) Project.
The MoU provides for supply of 20 PJ/a of gas over a 20-year contract period.
ERM Power Managing Director Philip St Baker said “The deal is valued at over $1.6 billion and will satisfy the project’s gas requirements for 20 years.”
Mr Casey said, “The quantity of gas to be supplied to ERM represents only 40 per cent of Eastern Star’s current certified 2P reserves or 7 per cent of current certified 3P and 3C reserves and resources, leaving huge upside for further domestic and export oriented marketing initiatives.”
Eastern Star Gas said that it expects to finalise a full gas supply agreement by the end of 2010 so that final project commitments can be made in mid-2011.The company will expand its Wilga Park Power Station before commencing gas deliveries to Wellington Power Station in mid-2013, and supply of gas to the New South Wales market will be made through a proposed link to the Central Ranges Gas Pipeline.
ERM Power said that it has successfully developed power stations based on CSG resources in Queensland and that it holds the same confidence for the Gunnedah region in New South Wales.
As part of the Wellington Power Station development, ERM has proposed a 220 km gas pipeline to run from the Young compressor/gas hub facility of the Moomba to Sydney Gas Pipeline to the power station.
