Australia is destined to become a major exporter of liquefied natural gas (LNG) now that Britain's BG Group has decided to go ahead and build a $US15 billion conversion plant near Gladstone.BG announced over the weekend that it had approved implementation
Australia is destined to become a major exporter of liquefied natural gas (LNG) now that Britain’s BG Group has decided to go ahead and build a $US15 billion conversion plant near Gladstone.
BG announced over the weekend that it had approved implementation of the first phase of the Queensland Curtis Liquefied Natural Gas project (QCLNG) after gaining approvals from the federal and state governments.
The first phase of QCLNG encompasses the development of a two liquefaction plants, or “trains”, on Curtis Island, near Gladstone (450 km north of Brisbane), together with associated pipeline facilities.
Other major players Santos and Origin Energy also plan to build plants at Gladstone, but BG is the first player to come out of the starting blocks.
All three aim to harness Queensland’s and New South Wales’ vast and relatively untapped coal seam gas (CSG) resource for conversion to LNG. It has been estimated that the two states combined have enough CSG to power a city of one million people for 5,000 years.
The first phase of BG’s liquefaction plant will consist of two LNG trains with a combined capacity of 8.5 million tonnes per annum (mtpa) of LNG.
BG’s aggressive expansion
The first LNG exports are planned to start from 2014, underpinned by agreements with Chile, China, Japan and Singapore for the purchase of up to 9.5 mtpa of LNG.
BG burst on to Australia’s energy scene when it spent A$5.3 billion on taking over a relatively unknown but CSG-rich explorer, Queensland Gas Co, in 2008.
In the same year, the British company launched a A$13.8 billion takeover of Origin Energy, with the aim of securing Origin’s considerable CSG reserves.
In the end, BG’s plans were thwarted when Origin formed a A$9.6 billion CSG joint venture with the U.S. energy colossus, Conoco-Phillips.
The QCLNG plant will be the world’s first LNG plant to be supplied by CSG, and BG chief executive Frank Chapman said it was a “significant milestone on the road to delivery of the group’s growth agenda over the decade ahead”.
Australian Treasurer Wayne Swan said the QCLNG was close to the single biggest investment in a Queensland resource project.
Investment boost
The project will account for an 11% boost in Australia’s total foreign direct investment over the four years of construction, he said.
LNG prices were mostly in the buyer’s favour in the early 2000s but they swung around from 2004 onwards, driven by Asia’s hunger for energy and LNG’s relatively low carbon footprint.
