BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X
Skip Navigation LinksHome|News & Analysis|News Features|News Feature Detail

Print

Australian CSG-to-LNG sector faces struggle to win public


By Christine Forster


December 2 - The much-anticipated launch of the world's first coalseam gas-based LNG export industry in eastern Australia has been realized, but there are growing signs that the gas producers are in for a struggle to win the hearts and minds of the general public and some local stakeholders.


The recent sanctioning by UK gas major BG Group of its LNG project in the port city of Gladstone marked the birth of what could eventually be a 50 million mt/year export industry in the Australian state of Queensland.


But the industry's good news has coincided with a run of negative press related to the discovery of traces of benzene in Queensland coalseam gas wells, sensational reporting of plans to explore for gas in the city of Sydney, and hype surrounding the release of the US protest film Gasland.


Article continues below...

LNG Daily LNG Daily


The leading source of information on new LNG supply projects, reports on development/construction of new liquefaction projects and plants, updates on siting/development/construction of new receipt terminals, details of LNG project financing, and much more.


Request a complimentary issue

Get your newsletter subscription now

See a sample

BG on October 31 gave the go-ahead for its $15 billion foundation Queensland Curtis LNG project on Curtis Island, flagging the start of work on the first of four possible world-scale projects in the new industrial precinct just off Gladstone. (See related table: Planned Curtis Island CSG-to-LNG projects)


The QCLNG first-phase project comprises the construction of two LNG production plants, known as trains, with total capacity of 8.5 million mt/year. Work to develop the liquefaction plant and related wells, field facilities and pipelines in Queensland's Surat Basin will take place over the next four years under the operatorship of BG's Australian subsidiary QGC, with first LNG exports planned for 2014.


QGC's proved and probable coalseam gas reserves and resources are estimated at 7 Tcf, from total gross discovered reserves and resources of 17.3 Tcf. The company sees significant potential to expand QCLNG with the construction of a third LNG train, already covered by existing federal and state environmetal approvals.


The go-ahead for QCLNG was hailed as "a watershed moment for the Australian oil and gas industry" by the chief executive of the Australian Petroleum Production & Exploration Association, Belinda Robinson. "The thousands of jobs and billions in export wealth it will generate for Queensland will diversify the state's economy and play a major role in sustaining and reinvigorating regional communities," she said.


"The environmental gains will be just as significant," Robinson added. "When Australian LNG is used in place of coal to generate electricity in customer countries, up to 9 mt of greenhouse gas emissions are avoided for every tonne produced in the production, liquefaction and export process."


Speaking after the project sanction, QGC Managing Director Catherine Tanna said QCLNG would create an estimated 5,000 construction jobs and nearly 1,000 jobs in operation from 2014.


"We estimate that the project will increase economic activity in Queensland by A$32 billion [$30.8 billion] over the project's first decade, or A$2.6 billion a year," she said. "We also expect to pay about A$1 billion a year in federal taxes and a further A$300 million or so each year in royalties to the Queensland government."


Until now, Australia's LNG industry was firmly focused on offshore gas resources around the country's northwest. LNG is already being produced at the 16.3 million mt/year North West Shelf project in Western Australia and the 3.6 million mt/year Darwin plant in the Northern Territory.


Two new plants are currently under construction in Western Australia: the 4.3 million mt/year Pluto foundation project, which is scheduled to start up in March 2011; and the 15 million mt/year Gorgon facility, slated to begin producing in 2014.


In the east and south of the country, however, the attention has shifted firmly toward unconventional gas, with the three other coalseam gas-based LNG projects planned for Curtis Island taking long strides toward development. Another handful of coalseam gas-based LNG plants have been touted for other locations on the east coast of Queensland and the neighboring state of New South Wales, but are mostly at very preliminary stages.


Shale gas is also starting to come into the Australian industry's thinking. Local player Beach Energy and Japan's Itochu floated the idea last week of tapping shale gas in central Australia's Cooper Basin for a mid-scale LNG project in South Australia.


The next most advanced of the Queensland coalseam gas-based projects is Gladstone LNG, which is being pursued by Australian exploration and production company Santos in a joint venture with Malaysian state-owned Petronas and French major Total. GLNG already has federal and state environmental approvals for its plant on Curtis Island and is targeting a final investment decision on the first of two 3.6 million mt/year production trains before the end of 2010.


A third project is being developed by the Australia Pacific LNG joint venture between Australia's Origin Energy and US-based ConocoPhillips. APLNG has yet to secure any LNG customers, but was given Queensland state environmental approvals for up to four 4.5 million mt/year trains on Curtis Island on November 9 and is expected to sanction the first two in the first half of 2011.


The fourth Curtis Island project is being planned by Shell and PetroChina subsidiary Arrow Energy, and is expected to produce between 6 million and 7 million mt/year of LNG. That project is not expected to be approved before 2012 and would begin producing after 2015.


Return to top


Next page: Coalseam gas projects face scrutiny






Copyright © 2017 S&P Global Platts, a division of S&P Global. All rights reserved.