Elixir Energy Ltd (ASX:EXR) has executed a land access agreement and welcomed strong contractor support for a planned appraisal well at its Grandis Gas Project in Queensland’s Taroom Trough.
The energy stock shook hands with a local landowner and formed a Conduct and Compensation Agreement, paving the way for drilling at the Daydream-2 gas well later this year.
The progress comes soon after Australia’s energy market operator and the consumer watchdog flagged a growing shortfall between gas demand and supply on the east coast.
In light of changes to the Safeguard Mechanism — a stipulation designed to keep emissions from Australia's largest greenhouse gas emitters below a baseline — Elixir believes a supply reduction will open the door for greener, less carbon-intensive projects like Grandis.
Local collaboration on the cards
With the land access agreement in hand, Elixir plans to begin working on a water well. This will provide water for operations and allow the gas stock to monitor groundwater quality, taking stock of its environmental impact.
Drillers and ancillary service providers are also interested in the company’s plans, throwing their hat in the ring ahead of this year’s drilling program.
In parallel, Elixir is negotiating with a local driller operator, exploring how they can cooperate and potentially share mobilisation costs.
Of course, if this is the avenue it pursues, then the Daydream-2 well timeline hinges on the drill rig and local operator’s availability.
Managing director Neil Young said Elixir still planned to spud the Daydream-2 well at the end of 2023.
“This is a very high impact well where success will add material volumes of now even more competitive gas resources to a gas market that government bodies such as the ACCC and AEMO notes will very soon be desperate for new gas supplies,” he explained.
Grandis gas is going green
Earlier this week, the Federal Government announced further reforms to Australia’s Safeguard Mechanism, designed to bring the country one step closer to achieving net-zero by 2050.
This mechanism regulates emissions from larger industrial ventures in Australia (including gas developments), but Elixir is buoyed by the very low CO2 readings in raw gas from the Taroom Trough.
Importantly, these CO2 levels (clocking in around 1%) meet gas pipeline specifications, so they are not considered scope 1 or 2 emissions of the gas supplier.
What’s more, Grandis’ close proximity to existing transmission infrastructure allows for a lower emissions profile than for more distant supply options.
Elixir also believes that electrical infrastructure will power future gas developments, facilitating greener projects with minimal scope 1 and 2 emissions.