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Elixir Energy Ltd (ASX:EXR) is positioning itself as a potential solution to the energy crisis affecting Australia’s east coast. At the RIU Essential Energy conference, Managing Director Neil Young highlighted how the ASX energy stock’s activities in the Taroom Trough could play a crucial role in addressing the region’s gas supply challenges.
Addressing the East Coast Gas Crisis
The east coast of Australia has been experiencing a significant gas crunch, driven by depletion in the Bass Strait and rising demand. Government intervention has established a floor on gas prices at approximately $12, and the inevitability of LNG imports underscores the need for additional measures to avoid severe energy shortages.
Neil Young emphasized that increased investment in the Taroom Trough, located in south Queensland, could be key to alleviating these issues. The region, which includes assets from major energy operators such as Shell, Santos, and Omega, is under exploration by Elixir for coal-bed methane (CBM) gas.
Taroom Trough: A Promising Energy Resource
The Taroom Trough is part of the larger Bowen Basin and presents several advantages due to its existing infrastructure. “Pipelines transport gas from Queensland to southern states, and the LNG plants in Gladstone have expanding capacity,” Mr. Young noted. “The region also supports significant local gas usage for power stations and has growing gas storage facilities.”
Elixir Energy’s flagship Grandis Gas Project is making notable progress, particularly with breakthroughs from the Daydream 2 appraisal well. According to Mr. Young, the Taroom Trough hosts a Basin-Centred Gas play, an unconventional gas reservoir that does not rely on traditional structural traps. This characteristic means it can contain large quantities of extractable gas.
Breakthrough Developments and Future Prospects
Recent developments at the Daydream 2 well have strengthened expectations for the Taroom Trough. Elixir Energy has achieved several milestones, including:
- Deep Coal Cuttings: The team collected coal samples from depths of 3700 meters and beyond, a first for the region. These samples revealed significantly higher gas content than previously anticipated.
- Free-Flowing Reservoir: For the first time in the Taroom Trough, a reservoir demonstrated free-flowing capabilities without the need for stimulation, even at depths of up to 4200 meters.
These advancements have bolstered the company’s confidence in declaring the project commercially viable. Economic modelling indicates a breakeven flow rate of approximately 2.5 million cubic feet per day (MMCFPD), further supporting the project’s potential.
Elixir Energy’s ongoing developments in the Taroom Trough could offer a significant boost to the east coast’s gas supply, addressing both current shortages and future energy needs. The company’s progress and innovative approaches highlight its role in shaping Australia’s energy landscape.
