Alternative Fuels

High Density Natural Gas

State Gas’ gas compression (HDNG) and accompanying supply chain technology remain a substantial point of differentiation for the Company. Together they provide a pathway to convert and deliver natural gas as a lower-emission, lower-cost alternative to diesel for heavy industry and mining customers who do not have access to traditional pipeline infrastructure.

Diesel substitution with HDNG has the potential to deliver fuel at a sustained discount to the historical price of diesel while simultaneously reducing Scope 1 carbon dioxide emissions, quickly and at low cost, across existing equipment fleets. Disruption to global fuel supply chains has made the price and security of locally produced gas comparatively more attractive to mining operators than diesel.

State Gas has developed a HDNG Pilot Plant, a “first of its kind” in Australia, which can produce up to 1.7TJ/day of pipeline quality compressed natural gas directly from the Company’s exploration wells at the Rolleston West CSG Project location. This technology has a range of benefits and potential use cases:

delivers substantial environmental benefits to gas producers, as it provides a reliable method for capturing and commercialising production testing gas which has historically been released to the atmosphere;
provides a new path to market for pipeline quality natural gas which the Company believes will become increasingly important across a range of industries, including critical minerals, while the economy continues its long-term transition to renewable energy sources;
is modular and can be efficiently expanded and easily relocated to support gas testing and processing opportunities in new locations; and
provides access to a new fuel source for end users who are seeking access to smaller, flexible quantities of natural gas, but don’t have access to traditional pipeline infrastructure and need to accelerate a transition away from diesel.

CSG is provided to the HDNG Facility by a gathering system connected to the Company’s Rougemont 2/3 dual lateral exploration and appraisal well (“Rougemont 2/3”), located within the Rolleston West Project area (ATP 2062). Compressed gas supply chain technology (such as virtual pipeline trailers) allows delivery of HDNG, in a range of up to 300km from the Pilot Plant.

Diesel displacement for Queensland coal mines

Diesel consumption by coal mine haul trucks in the Bowen Basin exceeds $2 billion a year, and HDNG is capable of displacing between 50% and 70% of that use if trucks are converted to dual-fuel (diesel/gas hybrid). Substituting HDNG for diesel will:

reduce the customer’s fuel supply risk linked to global liquid fuel supply chains;
deliver substantial fuel cost savings to the customer (relative to the historical price of diesel); and
reduce the customer’s Scope 1 CO₂ emissions

A successful Queensland coal mining company (Foundation Customer) has given conditional support to adopt HDNG and State Gas’ proprietary fuel delivery process, as part of a multi-year HDNG supply arrangement supporting six to twelve mine haul trucks. The commitment is conditional on technical approvals and on securing funding for the Foundation Customer implementation.

State Gas has lodged an Expression of Interest with Queensland Treasury under the Low Emission Investment Program (LEIP), which if approved will finance the capital cost of this initial implementation. The Company is working with the Foundation Customer and the Queensland Government to satisfy the above conditions and is targeting implementation in the second quarter of calendar 2027.

Securing Queensland Government endorsement through LEIP funding, in conjunction with the Foundation Customer implementation, will support State Gas’ strategy of wider industry adoption of diesel/natural gas dual fuel solutions across the Queensland coal mining sector.