Moranbah Gas Project.

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LOCATION
The Moranbah Gas Project (MGP) is located in the Bowen Basin, approximately 400km south of Townsville and 170km west of Mackay.

EQUITY
The MGP is operated by Arrow in a 50/50 joint venture with AGL Energy Ltd.

FIRST GAS
First gas was sold from the field to Enertrade in September 2004.

GAS CONTRACTS
Arrow Energy and AGL Energy acquired the merchant gas businesses of Enertrade from the Queensland Government in November 2007. The joint venture now has gas supply agreements with Queensland Nickel Industries for up to 6 petajoules (PJ) per year, and Copper Refineries for up to 0.25 PJ per year.

The balance of production is fed to the Yabulu Power Station in Townsville. Arrow and AGL share the right to dispatch the electricty generated from the 230MW power station under a long term agreement with Transfield Services.

Arrow has a Gas Supply Agreement with Incitec Pivot Limited to supply 7 PJ/year of gas over a period of 15 years. First gas supply is expected in 2010. AGL Energy has the right to take up a 50 percent interest in the GSA and the associated proudction areas. 

GAS PRODUCTION
The MGP is currently the sole supplier of natural gas into the Townsville market. The MGP is one of the the largest operating coal seam gas projects in Australia - total gas production for the year ended 30 June 2008 was 16.8 PJ. Gas from the Moranbah North Mine Degassing Project is currently being sold into the MGP. The daily rate being contributed from these wells is close to 3 terajoules per day.

RESERVES
In 2008, independent reserve certifiers Netherland, Sewell & Associates, Inc. confirmed a reserves base at the MGP with the certification resulting in IP, 2P and 3P gross reserves of 127 PJ, 593 PJ and 1807 PJ respectively.

PRINCIPLE EXPLORATION TARGETS
Additionally, at least one well will target a test of the Fort Cooper Coal Measures (“FCCM”). Typically the FCCM exhibits net coal thicknesses of up to 50 metres and there have been previously measured high gas contents. The FCCM seams are laterally extensive across the Moranbah area but their possible resource has not previously been included in Moranbah area resource assessments.

MORANBAH GAS PROCESSING FACILITY
Arrow Energy and AGL Energy acquired the Moranbah Gas Processing Facility (MGPF) from Enertrade. Operated by Arrow, the MGPF currently comprises inlet gas conditioning, four 2.6MW reciprocating gas enegine compressor units, a triethylene glycol gas dehydration unit and export gas metering and monitoring. The facility is used to process gas for injection into the North Queensland Gas Pipeline.