AGL sells back gas exploration licence to NSW

OREANDA-NEWS. Australian utility and gas company AGL Energy has sold back its petroleum exploration licence (PEL) 5 to the New South Wales (NSW) state government for an undisclosed fee.

The permit was sold back under the state's voluntarily buy-back scheme, part of last year's NSW gas plan. The permit covers a 400km? area from Wyong to Morisset on the NSW's Central Coast, north of Sydney.

AGL made the decision to sell PEL 5 back to the NSW government after it was deemed not commercially viable. "The majority of the surface area is covered by lakes and mining leases leaving only 10pc of the PEL area available for exploration," said AGL's acting group general manager for upstream gas, Scott Thomas.

AGL operates only one gas project in NSW, its coal-bed methane (CBM) venture at Camden, southwest of Sydney. It also operates gas-fired power stations and supplies gas directly to commercial and residential customers on the east coast of Australia.

The PEL 5 sale comes less than a month after AGL announced that it will carry out a major review of its upstream gas business, just weeks after it suspended drilling on its main project the Gloucester CBM venture in NSW. The 20-30PJ/yr (1.46mn-2.2mn m?/d) Gloucester CBM project was suspended following the detection of BTEX compounds that naturally occur in crude and are found in areas near gas fields.

AGL was forced to cut its proven and probable gas reserves at Gloucester and other CBM projects in NSW in the 2012-13 fiscal year ending 30 June. AGL cut its CBM reserves by 16.5pc, or 9.14bn m?, to 46.34bn m? after the NSW government changed its regulations to introduce exclusion zones, affecting several of AGL's projects that have not been approved. The changes also led the company to write down the value of the CBM assets, resulting in a pre-tax impairment charge of A\$343.7mn (\$271mn).