The Australian Government is backing Elixir Energy's Grandis Gas Project

The Australian Government is backing Elixir Energy (ASX: EXR) and the company’s exploration aspirations at its Grandis Gas Project in Queensland, which has a prospective contingent resource of 365 billion standard cubic feet of gas.

Elixir received an Advanced Finding from the Australian Government Department of Industry, Science and Resource on Wednesday for 43.5% of qualifying well costs.

“Our technical team and supporting professional advisers have done a fantastic job on procuring this R&D Finding. This reflects the innovative thinking that we believe can crack the code to release the enormous gas in place known to be in the Taroom Trough,” said Managing Director Neil Young. 

The company has developed a proprietary Mechanical Earth Model (MEM) and Reservoir/Frac Model which has the potential to improve flow rates significantly.  Flow rates refer to the volume of oil or gas that can be produced from a well. This data is used to estimate the commercial and economic viability of a project.

“Having the Government fund nearly half of Daydream-2 is a superb outcome for Elixir shareholders – and demonstrates that the Australian Government strongly recognizes the long term criticality of new East Coast gas supplies,” he added.

Daydream-2: Raising flow rates and resource bookings

Drilling is set to take place at Daydream-2 in late 2023, with the primary goal of establishing increased flow rates from multiple zones.

Exploration success at Daydream-2 has the potential to “lead to a material increase in contingent resources in the overall licence area,” says Elixir. 

Australia faces a serious gas shortage

The Australian Competition and Consumer Commission (ACCC) has forecast a supply shortfall of 56 petajoules of gas in 2023 – equivalent to approximately 10% of annual demand.

The shortage reflects a combination of increased demand for gas from export markets, a decline in domestic gas production and government policies that have made it more difficult to develop new gas projects.

Disclaimer: Market Index helps small-cap ASX-listed companies connect with Australian investors through clear and concise articles on key developments. Elixir Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.