AGL Energy to Invest in Galilee Basin Coal Seam Gas Program

AGL Energy has announced a A$37 million investment in a coal seam gas production pilot and exploration and appraisal program with Galilee Energy in the Galilee Basin in the state of Queensland, Australia.

Galilee Energy’s majority owner is Eastern Corporation. The farm-in agreement, between AGL and two of Galilee Energy’s wholly owned subsidiaries, will see AGL investing up to A$37 million over two stages to acquire a 50% interest in exploration tenement ATP 529P.

AGL noted that the first stage of the program will involve the Rodney Creek production pilot in ATP 529P at a cost of A$20 million. Work on the first stage is expected to commence by November 2008.

The second stage will involve an exploration and appraisal work program during financial years 2010 and 2011 at a cost to AGL of A$17 million. The parties have also entered into a 10-year gas marketing agreement. Under the terms of the farm-in, AGL will assume operatorship of the joint venture under a joint operating agreement.

Michael Fraser, AGL managing director, said: “This farm-in agreement is a further step in growing AGL’s gas reserves through targeted exploration and appraisal drilling, utilizing the skills AGL has developed as operator of the Camden Gas Project joint venture.”