30 Upstream  Gas Review of  Operations Advancing the  long-term security  of gas supply Greater  community  involvement AGL’s Upstream Gas business explores,  develops, stores and produces natural gas. AGL understands there is  community uncertainty  about coal seam gas. We have  increased our efforts to keep  local communities informed  about our exploration and  development activities, with a  new community relations team  living and working in project  areas, and the opening of the  Singleton Information Centre. 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. Upstream Gas is responsible for advancing  AGL’s position to achieve long-term security  of gas supply. Its portfolio includes assets in  Queensland and New South Wales. In Queensland, AGL’s upstream portfolio  includes Silver Springs production,  development and storage, along with AGL  joint venture interests in the Moranbah Gas  Project, the Galillee Basin, the Cooper Basin,  and at Spring Gully. 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’s New South Wales portfolio comprises  wholly owned and operated assets at  Camden, in the Hunter Valley, and at  Gloucester. 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  service opportunities, the facility will allow  AGL to manage demand and maintain  gas supplies. The report explored what affects, if any,  there might be on the groundwater from  natural gas exploration. It provided an in- depth foundation for future work, involving  geological appraisals, drilling, permeability  testing, water level monitoring, water quality  sampling, isotope studies, data collation,  analysis and reporting. The project is located near key gas markets  in Brisbane, Gladstone and Mt Isa. Operating EBIT for the year was $0.6 million,  a decrease of $13.7 million on the previous  year. The decrease was due mainly to a fall  in income from the provision of gas storage  services. At year end, proved plus probable (2P)  reserves were 2,166 PJ, an increase of  77 PJ (3.7%) on last year. AGL’s entitlement  to 2P reserves within ATP1103 in the Bowen  Basin in Queensland increased as a result of  exploration and appraisal activities during  the year. 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. The report’s findings conclude that: > there are four types of groundwater  systems across the area; > there are few beneficial aquifers.  The water in the shallow aquifers in  the alluvium and shallow rock is saline  and low yield, and is only suitable  for stock water supply and limited  domestic purposes; and > deeper water bearing zones have no  groundwater resource potential. Subsequent to the end of the financial year,  the Land and Environment Court upheld  the validity of the planning approval for the  project. AGL now intends to recommence  exploration activities in the project area. During the year, AGL released its report  investigating groundwater and surface  water conditions within its Gloucester Gas  Project area. AGL delivered on its promise  to the community, by submitting the report  for independent peer review as prescribed  and overseen by the Gloucester Community  Consultative Committee. In November AGL officially opened its Silver  Springs Underground Gas Storage project  south of Roma, Queensland. AGL has developed underground gas storage  in a depleted sandstone reservoir in the  Bowen Surat Basin in central Queensland  that is underpinned by a contract with  QGC Pty Limited (QGC – a BG Group  business). The reservoir and related Silver  Springs assets were part of AGL’s acquisition  of Mosaic Oil which was completed in  October 2010. Gloucester Gas Project Commissioning of the Silver Springs  Underground Gas Storage Facility Financial Performance