CSM Energy’s operations focus on pursuing coal mine methane (CMM) gas extraction. The company has a number of agreements with coal mine operators to pursue CMM projects in Queensland and has also originated a number of project opportunities in New South Wales.
AGL said that, although CMM gas has traditionally been a waste product for coal miners, it is now potentially a major natural gas resource within mining leases, as tighter environmental regulations are leading to numerous opportunities to provide gas extraction services to the coal mine sector.
A range of gas commercialization initiatives arise from participating in CMM projects, such as power generation and wholesale gas sales, the company added.
AGL managing director Paul Anthony said: As part of this deal, AGL has secured valuable rights to access any gas production and power generated from future CMM projects, and we have the further option to acquire a minimum 35% direct equity stake in all projects pursued by CSM Energy.
AGL will fund the acquisition through existing cash reserves. The transaction is expected to be completed prior to the end of June 2007, when AGL’s nominees will assume two seats on the reconstituted board of CSM Energy.
In 2006, AGL acquired a 50% interest in the Moranbah gas project, which is adjacent to one of CSM Energy’s CMM project areas.
