Commercial negotiations are being progressed following technical work indicating that up to 75 Bcf can be stored in the field. Based on preliminary results of the reservoir modelling work conducted by an independent consultant, Irrgang Reservoir Management, Mosaic said that it was confident that the underground gas storage possesses all the characteristics expected by its potential Queensland-based customers.

The company said that the field could provide suitable storage for ramp-up gas for LNG projects, on-going gas production management, meet seasonal gas demand and peaking supply for electricity generation, as well as provide security in the event of supply interruptions.

Work is now underway to finalise the reservoir modelling and to conduct the necessary geomechanical studies within the second half of the year. These will underpin the planned conversion of the field to gas storage.

Commercial modelling and preliminary facilities design have commenced with the assistance of consultants and are expected to result in a front-end engineering and design study also to be completed within the second half of 2009.

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Mosaic acting chief executive officer Tim Petersen said that this high value project could realise a new revenue stream for the company as early as the first quarter of 2011.