31 AGL Energy Limited 2011 Annual Report Increased  gas reserves Newcastle Gas Storage Facility The Camden Gas Project Other New South Wales Assets *   Under a 50-year project agreement that commenced in 2000, AGL has no effective exploration rights (or ongoing cost obligations) within exploration tenement ATP 1103 as these were assigned  to Arrow Energy Limited. However, AGL is entitled to participate up to a 50% interest in any commercial development by contributing its share of past costs. Past costs are anticipated to be less  than $0.05/GJ. AGL also owns and operates other coal seam gas projects at  Gloucester (PEL 285, located approximately 100 km north of  Newcastle), and in the Hunter Valley (PELs 4 and 267). To date, AGL’s activities in the Hunter Valley have involved obtaining  approximately 300 kilometres of seismic data, drilling 16 core holes  and six stratigraphic holes, and the operation of two pilot test wells.  The petroleum exploration phase of the Hunter Valley Gas Project is  expected to continue for at least three to five years. AGL has recently opened an Information Centre in Singleton to make  available to the local community opportunities to learn more about  AGL’s operations in the Hunter region and the steps we take to  safeguard the health and wellbeing of the environment and the local  residents. Over the last year, there has been a substantial increase in the level  of media and community scrutiny of coal seam gas projects in both  Queensland and New South Wales. Our exploration activities in  the Hunter Valley have been the subject of a number of protest  activities initiated by local residents concerned about whether our  operations will harm the local environment. Subsequently, a local community action group has initiated a  judicial review of the approvals in the New South Wales Land and  Environment Court. The review process will take several months  to run its course. In the meantime, AGL intends to continue  preparatory activities in anticipation that final project approvals will  ultimately be received. AGL intends to invest about $300 million in the project during the  next five years. Subject to formal planning approval, AGL anticipates construction  to commence later this year, with the facility to be operational by  winter 2014. The Camden Gas Project is situated 65 kilometres south-west of  Sydney and comprises the only commercially producing gas wells  in New South Wales. Gas is produced from local coal seams. The  gas production facility co-exists with other land uses, such as  agricultural and residential housing developments. During the year, AGL commissioned a new state-of-the-art Ensign  67 rig which has drilled four wells since January. Toward the end  of the year, AGL also placed a new service rig into operation,  performing maintenance on six wells to improve production. The Department of Planning in New South Wales has found  this project to be a Major Project subject to Part 3A of the  Environmental Planning and Assessment Act. An Environmental  Impact Assessment has been completed and made publicly  available in July 2011. In New South Wales, AGL has proposed development of a gas  storage facility near Newcastle. When complete, the facility is  expected to have the capacity to store 1,500 TJ  of gas and provide  a peaking supply of 120 TJ/day. The storage facility would allow  AGL to meet its peak gas market requirements over winter and  to provide additional security of gas supply if there are other  circumstances which threaten the availability of gas supply to  Sydney and Newcastle. Upstream Gas continued to  increase its gas reserves. For  AGL’s customers, growth of  reserves means security of  supply. During the year, the Gloucester Gas Project received a concept  plan approval and a Part 3A planning approval authorising: > stage 1 of the Gloucester gas field development, including  110 gas wells and associated infrastructure; > a central processing facility to treat gas and water; and > construction of a gas transmission pipeline between the central  processing facility and the existing gas supply network at Hexham. AGL share of CSG reserves As at 30 June 2011 As at 30 June 2010 Change PJ 2P 3P 2P 3P 2P 3P Gloucester (100%) 669 832 669 832 – – Moranbah (50%) – Bowen Basin 370 700 501 1,022 (26.1%) (31.5%) Camden (100%) 148 195 154 201 (3.9%) (3.0%) Hunter (100%) 142 271 – – na na Silver Springs (various) 65 137 – – na na Spring Gully (various, small) 8 10 8 10 – – Sub-total 1,402 2,145 1,332 2,065 5.3% 3.9% ATP 1103 rights (50%) – Bowen Basin* 687 1,495 246 1,307 179.3% 14.4% Total 2,089 3,640 1,578 3,372 32.4% 7.9%