AGL Energy Limited 2012 Annual Report 31 Newcastle Gas Storage facility  receives Government approval Coexistence Yesterday, today,  tomorrow... During the year, AGL continued to undertake  activities to demonstrate that coal seam gas  exploration and production processes can  co-exist with the agricultural, viticultural  and tourism industries already operating  in areas such as the Hunter Valley in  New South Wales. In addition to owning  gas exploration permits, AGL also owns  the freehold interests in approximately  4,203 acres of land in the Hunter Valley,  including nearly 100 acres of vineyards on  which a number of gas exploration wells and  water monitoring bores have been drilled.  Using the grapes from our owned vineyards,  AGL has worked with local winemakers to  produce award winning wines. AGL has also appointed a station manager to  look after its properties in the Hunter Valley.  The station manager’s responsibilities will  include the development of some of the land  as operating cattle farms. During the year, the New South Wales  government released a number of draft  policy proposals regarding strategic use  of land and interference of aquifers. It  also released a draft code of practice for  coal seam gas exploration activities. AGL  welcomes the Government’s efforts to put  in place policies and codes of practice to  protect the State’s valuable land and water  resources while recognising the importance  of developing gas reserves to preserve  the security of energy supply over the  long term. The facility will allow AGL to provide  security of gas supply for more than  700,000 customers by managing peak gas  demand and pipeline constraints. The New South Wales Planning Assessment  Commission and the Commonwealth’s  Department of Sustainability, Environment,  Water, Population and Communities have  approved AGL’s application to construct  the Newcastle Gas Storage Facility project  at Tomago, near Newcastle. Expected to be completed in 2015, the  facility will include: > a processing plant that will convert  pipeline natural gas to liquefied natural  gas (LNG) by cooling it to –162°C. It will  be capable of processing up to 66,500 t  of LNG per year; > an insulated, non-pressurised LNG  storage tank capable of containing  30,000 t or 63,000 m³ of LNG,  equivalent to 1.5 petajoules (PJ)  of natural gas, and an associated  containment area; and > a re-gasification unit to convert the LNG  in the storage tank back into natural gas. From lighting the first gas street light in  Sydney in 1841 to pioneering the nylon  pipe technology in the 1980s, AGL has  continued to transform the Australian  energy industry in Australia. Today, AGL  has a portfolio of gas investments to  supply our customers. We are securing  a sustainable future of reliable gas supply  with gas storage facilities and coal seam  gas projects. 1 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 (previously designated  ATP 364P) 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 share of CSG reserves As at 30 June 2012 As at 30 June 2011 PJ 2P 3P 2P 3P Gloucester (100%) 669 832 669 832 Moranbah (50%) – Bowen Basin 376 862 370 700 Camden (100%) 142 189 148 195 Hunter (100%) 142 271 142 271 Silver Springs (various) 61 158 65 137 Spring Gully (various) 8 10 8 10 Sub-Total 1,398 2,322 1,402 2,145 ATP 1103 back-in rights (50%) – Bowen Basin (1) 768 1,660 687 1,495 Total 2,166 3,982 2,089 3,640