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## Upstream Gas 

Upstream Gas advances AGL’s position in the long-term security of gas supply by pursuing a number of value-creation strategies that build a portfolio that fi lls the gap between the contracted gas supply and customer demand. 

Upstream Gas is responsible for advancing AGL’s position in achieving long-term security of gas supply. It also has investment positions in companies involved in exploring the possibilities of developing geothermal energy sources. 

The gas portfolio is divided into two broad regions: 

(i) Queensland/South Australia; and 

(ii) New South Wales. 

The Queensland/South Australia portfolio includes AGL joint venture interest in the Moranbah Gas Project, and other joint venture interests in the Galillee Basin, the Cooper Basin, and at Spring Gully. It now also includes interests acquired during the year following the successful acquisition of Mosaic Oil N.L. 

The New South Wales portfolio includes the Camden Gas Project, and assets in the Sydney Basin (which includes the Hunter Valley) and at Gloucester. These assets are wholly owned and operated by AGL and are close to AGL’s core New South Wales gas market 

## Kuarna ancestors find their way home 

When conducting a heritage assessment for the potential future development of the Torrens Island Energy Park, the AGL team sought the input of the local Kaurna people. This led to the repatriation of 68 Kaurna ancestors within the Torrens Island Conservation Park, some almost 200 years after their removal. 

Through the support provided by AGL, the Kaurna people have reclaimed ancestral remains held by the South Australian Museum and obtained permission for the reburial within the Conservation Park. A number of signifi cant cultural ceremonies have also been conducted, including a traditional ‘Sorry Ceremony’ during which Kaurna elders were finally able to bury their ancestors in a traditional resting place. 

## Financial Performance 

Operating EBIT for the year was $13.6 million, an increase of $8.1 million on the previous year. The increase was due mainly to the receipt of income from the provision of gas storage services. This is discussed in more detail below. 

## Growth in Gas Reserves 

At year end, 2P reserves were 2,089 PJ, an increase of 32.4% on the previous year. Successful exploration activities resulted in the first booking of gas reserves in the Hunter Valley (142 PJ). 

AGL’s share of gas reserves in the Bowen Basin in Queensland increased by 310 PJ during the year. The acquisition of Mosaic Oil N.L. added a further 65 PJ of 2P reserves. 

The Galilee Gas Project (ATP 529P), in which AGL holds a 50% joint venture interest, has announced its first resource estimation of 259 PJ of 2C resources. 

## Gas Storage 

The ability to store gas for use during periods of peak demand will become an increasingly important asset in maintaining continuity of gas supply – to our gas customers and to our own gas-fired generation assets. During the year, AGL made substantial progress in advancing two gas storage projects. 

## Silver Springs Underground Gas Storage Project 

In October, AGL acquired Mosaic Oil N.L. through a court approved scheme of arrangement. In addition to permits for conventional oil and gas exploration and production, the acquired assets of Mosaic included the depleted Silver Springs/Renlim gas fields, an ideal underground gas storage location. 

Following completion of the acquisition of Mosaic, AGL redeveloped the underground gas reservoir as a gas storage facility. 

The capital cost of developing the gas storage facility was underwritten by a seven year contract to provide gas storage services to QGC Limited (a BG Group Company). The agreement with QGC will produce gas storage fees of approximately $8 million to $10 million per annum over the next three years. With its initial storage capacity of 35 PJ, the reservoir will store gas to support BG’s development of a liquefied natural gas facility in Gladstone. 

It will also help AGL better manage its gas supply during seasonal variations in demand in peak summer and winter periods. 

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