Blue Energy named preferred tender for Qld methane blocks

West Perth-based energy exploration company Blue Energy Ltd subsidiary Eureka Petroleum Pty Ltd has been named the preferred tenderer for 375 contiguous sub-blocks of coal seam methane gas, 130 km west of Brisbane, the company has announced.

The full text of a company announcement is pasted below

Diversified explorer and coal bed methane gas (CBM) developer Blue Energy Limited (ASX: BUL) is pleased to confirm that it has been named the preferred tenderer for ATP 896P offered by the Queensland Government in the recent 2007 exploration land releases.

ATP 896P comprises 375 contiguous sub-blocks totalling some 1,142 km², and is to be held 100% by Blue Energy Limited through its wholly owned subsidiary Eureka Petroleum Pty Ltd.

The ATP is located approximately 130 kms west of Brisbane and overlies the Roma to Brisbane gas pipeline in Queensland's Surat and Clarence/Moreton Basins. ATP 896P is directly adjacent to Blue Energy's 100% owned ATP 818P. The acquisition of ATP 896P substantially enhances the geological integrity of its Walloons CBM play in this area.

The acquisition of this Permit is in an area that is highly prospective for CBM and takes the area covered by the Company's leases and farm-in arrangements in Queensland and South Australia to over 32,000 km², making Blue Energy's tenement packages amongst the world's largest CBM development portfolios.

The permit overlies the shallow Walloon Coal Measures in an area lightly explored. The coal seams in ATP 896P permit are the same seams that are present in the CBM developments of Kogan North, Tipton West and Daandine Fields west of the area and known to contain commercial gas contents and productivity.

Blue Energy Limited will commence a 2-well core and 4-well pilot drilling program over the Permit in early 2008. Following coring, early production testing by pilot development will allow us to assess gas saturation, composition and overall productivity.

Managing Director, Sharif Oussa, said: "The new Surat Basin lease is highly prospective, based on known accumulations, proximity to producing wells and critical pipeline infrastructure, and adds significantly to our Walloon Coals CBM play".

Following a recent capital raising from institutional investors Blue Energy has $33 million in cash to invest in appraisal and development programs on its Queensland CBM portfolio.