Delays in ATP 854 Awards Could Stall Blue Energy’s Surat Basin Plans

Progress at Sapphire and Strategic Positioning

Blue Energy Limited (ASX, BLU) has reported ongoing progress in its Queensland gas projects during the December 2025 quarter, with a particular focus on the Sapphire block (PL 1034) in the Bowen Basin. The company is advancing environmental data acquisition to satisfy regulatory requirements, a critical step towards development approval. Concurrently, planning is underway for a new gas appraisal well, signalling Blue Energy's commitment to expanding its resource base.

The Sapphire Pilot wells continue to produce gas, and Blue Energy is working closely with Queensland Pacific Minerals Energy (QPME) to potentially supply gas to QPME’s proposed nickel refinery in Townsville. This collaboration includes a non-binding memorandum of understanding to connect the Sapphire Pilot to the Moranbah Gas Project infrastructure, which could streamline supply logistics and enhance commercial viability.

Resource Base and Regulatory Outlook

Blue Energy holds a substantial portfolio of gas reserves and resources, with 91 petajoules (PJ) of 2P (proved plus probable) gas reserves and 1,617 PJ of 2C (contingent) gas resources, amounting to a combined 1,708 PJ. These figures underscore the company’s significant potential to contribute to Queensland’s energy needs.

Meanwhile, Blue Energy awaits a decision from the Queensland Government on the award of Potential Commercial Areas (PCAs) within ATP 854 in the Surat Basin. This area contains an estimated 398 PJ of contingent gas resources, strategically located near key pipeline infrastructure linking Wallumbilla to Gladstone. The outcome of this decision will be pivotal in determining Blue Energy’s ability to accelerate development and market supply from this permit.

Queensland Energy Roadmap and Market Context

The Queensland Government’s Energy Roadmap has recently reaffirmed the essential role of natural gas in ensuring electricity system reliability and firming capacity. The roadmap projects a significant expansion of gas-fired generation capacity in Queensland, from the current 3.5 gigawatts (GW) to between 6.1 and 8.3 GW by 2035. This growth reflects a broader recognition of the limitations of intermittent renewable energy sources and the critical need for dispatchable power, especially as demand surges driven by data centres and artificial intelligence infrastructure.

Global energy discussions, such as those at the World Economic Forum in Davos, have echoed this sentiment, highlighting the indispensable role of natural gas alongside renewables to meet rising electricity demands. Industry leaders emphasize that technologies like AI and data centres require continuous, reliable power supplies that intermittent sources alone cannot provide.

Financial Health and Exploration Activities

Blue Energy maintains a robust financial position with nearly $5 million in cash and no debt, providing a solid foundation for ongoing exploration and development activities. During the quarter, the company spent approximately $282,000 on exploration and evaluation, focusing on environmental compliance and resource assessment, particularly at the Sapphire project.

In the Northern Territory’s Greater McArthur Basin, Blue Energy continues to hold exploration permits with a 10% interest, working towards increasing its stake to 50% following completion of seismic programs. These emerging basin activities complement the company’s established Queensland assets and diversify its portfolio.