Australia's Dart Energy has signed its first gas sales agreement on its PEDL 133 coalbed methane project in Scotland with one of the "big six" UK utilities with over nine million retail customers, the company said Wednesday.
The sales agreement with Scottish and Southern Energy is for five years, starting April 2013, and extendable by mutual agreement.
SSE will buy gas supplied by Dart at a price linked to the prevailing prices in the UK natural gas market. The current price of a UK annual gas contract in the wholesale market is 69.30 pence/therm ($11.10/MMBtu or around $11/Mcf).
There is no minimum delivery requirement in the agreement. The PEDL 133 license area has been assessed as holding 43 Bcf of proven and probable reserves by Netherland Sewell & Associates.
Dart estimates that up to 20 wells will be required to ramp-up to first gas sales, with 10-12 wells needed each year to sustain production rates. In June, Dart said the PEDL 133 was the largest CBM reserve so far found in Europe.
Dart was spun off in mid-2010 from Arrow Energy after the Australian coalseam gas producer was acquired for A$3.4 billion ($3.64 billion) by Shell and PetroChina. The two global giants wanted Arrow's gas resources in the northeastern Australian state of Queensland to underpin their planned 8 million mt/year LNG project on Curtis Island in Gladstone.
