AGL Energy Limited (AGL) today officially opened its Silver Springs Underground Gas Storage project at a launch event held at the Silver Springs site located south of Roma, Queensland.

The commissioning follows an agreement entered into between AGL and QGC Pty Limited (QGC - a BG Group business) for AGL to develop a gas storage project at the depleted Silver Springs/Renlim gas reservoir in the Bowen Surat Basin in central Queensland.

AGL acquired this asset as part of its acquisition of Mosaic Oil which was completed in October 2010.

The arrangements will allow QGC to store gas in the reservoir while it develops its Queensland Curtis LNG Project, which will convert coal seam gas into liquefied natural gas for Asia-Pacific markets.

AGL will provide QGC with gas storage services for up to seven years until 2018. AGL has agreed to deliver gas to QGC from the gas storage project by swapping gas which QGC is required to deliver to AGL at Berwyndale under AGL's existing long term gas sale agreement with QGC.

AGL CEO Michael Fraser said: "This facility provides AGL with significant long term value as the eastern Australian gas market shifts its focus to the international LNG market. In addition to opening up contractual opportunities, such as the one AGL and QGC have arranged, this facility will allow AGL to manage demand and mitigate interruptions of gas supply."

"The project location, near the Wallumbilla gas hub in Queensland, means that we can service gas markets located at Brisbane, Gladstone, Mt Isa, and south through the Moomba gas hub. This project will offer AGL with significant gas supply flexibility and commercial opportunities for years to come."

As part of the launch event, executives from AGL and QGC toured the facility, which is located south of Roma, including Mr Fraser and AGL's Group General Manager Upstream Gas, Mike Moraza.

Catherine Tanna, BG Group Executive Vice President and Managing Director Australia, said: "As a leading player in Queensland's energy industry, QGC is proud to be the foundation customer of AGL's Silver Springs gas storage project, the biggest project of its type in Queensland. It marks another important advance in the prosperous relationship between our companies."

The facility will use the APA-owned Berwyndale to Wallumbilla Pipeline to transport gas to the AGL-owned Silver Springs Pipeline. This allows gas to flow to and from the Wallumbilla gas hub from the Silver Springs gas plant and our newly acquired Wallumbilla LPG plant.

Mr Moraza said: "The storage of natural gas is now a very important part of the maturing natural gas industry story in this country and AGL is proud to be leading the way in providing innovative solutions for our customers."

About AGL

AGL is one of Australia's leading integrated renewable energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has one of Australia's largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.