Blue Energy shares surged over 57% after announcing a 10-year Queensland gas supply deal with Energy Australia.

The agreement is for annual deliveries of 10PJ and on the ASX BLU stock climbed to 8.8 cents on news of the deal, before settling at 8.2 cents at close on Friday.

Blue’s Managing Director, John Phillips, said: “This is the first such agreement that will allow North Bowen Basin gas to be delivered into the main East Coast domestic market to the south from Moranbah”

“It is a foundation volume that will contribute to the underpinning of the proposed gas pipeline from the North Bowen Basin into the Wallumbilla” hub and for the development of Blue’s Bowen tenements”

“It is very encouraging to see that the acknowledgement by the Federal and Queensland governments of the gas potential in the North Bowen Basin has given gas buyers the confidence to seek to secure long-term gas supply agreements for gas from this under-developed producing basin.”

Bowen Basin boost

This is the first agreement that will allow North Bowen Basin gas to be delivered into the main East Coast domestic market to the south from Moranbah.

Blue Energy said this development represented a foundation that would underpin the proposed gas pipeline from the North Bowen Basin into the Wallumbilla “Hub” and for the development of Blue’s Bowen tenements.

Blue’s independent reserves assessor, Netherland Sewell and Associates Inc of Dallas Texas (NSAI), has identified the areas where Blue can develop its resources, and which coincide with Blue’s Production Licence Applications currently with the Queensland Government.

Blue’s ATP814 permit has been assessed by NSAI to contain 3,248 PJ+ of Contingent Resource (recoverable) around Moranbah. In addition to this volume, there is currently 71 PJ of 2P reserves and 298 PJ of 3P reserves in close proximity to the existing gas field infrastructure in the North Bowen Basin.