Santos-led JV gives final nod to Gladstone LNG project

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Jan. 19 -- An international consortium led by Santos Ltd. has given its final approval to develop the $16 billion, 7.8 million tonnes/year Gladstone LNG project in Queensland.

“Already Australia’s largest domestic gas producer, GLNG confirms Santos as a major energy supplier to the growing economies of Asia,” said Santos Chief Executive David Knox, referring to agreements already in place with Petronas and Kogas for the supply of 7 million tpy of LNG beginning in 2015.

Total said the integrated LNG project consists of extracting coal seam gas from the Fairview, Arcadia, Roma, and Scotia fields in the Bowen and Surat basin in Queensland, eastern Australia.

“The fields’ resources are estimated at 9 tcf of gas,” Total said, adding that the partners will develop their share of the fields to reach a production plateau of 900 MMcfd.

In addition, the project calls for construction of a 420-km gas transmission pipeline from the fields to Gladstone, and two LNG trains with a combined nameplate capacity of 7.8 million tpy on Curtis Island.

Santos said the recent investment approval will trigger major works for upstream field development, pipeline, and LNG plant facilities at Gladstone, including orders for long lead items such as line pipe, compressors, and LNG plant components.

GLNG is the second multibillion dollar gas venture to go ahead at Gladstone after BG Group PLC approved its Queensland Curtis LNG project in October 2010. Meanwhile, two other projects are in the planning stage, one by Royal Dutch Shell PLC and PetroChina Co., and the other by Origin Energy Ltd. and ConocoPhillips.

Knox acknowledged approval of the GLNG project came at a very difficult time for the state of Queensland, which is confronting the human and economic cost of severe flooding across many communities. Government officials said the GLNG project would help give the state’s economy a boost with the creation of 6,000 jobs in the short-to-medium term.

Queensland Premier Anna Bligh noted, “Proceeding now with projects like this will be a tremendous boost to the Queensland economy as we recover from the devastating impact of the floods.”

Australia’s Minister for Resources and Energy Martin Ferguson said the benefits of the GLNG project will be both immediate and continue over the longer term. “This project and economic development more generally is important in underpinning the skills, tax revenue, wealth, and capacity to respond and re-build in the aftermath of the current flood crisis in Queensland,” he said.

GLNG is a joint venture of Santos, operator, 30%; Petronas 27.5%; Total SA 27.5%, and Kogas 15%.

Contact Eric Watkins at hippalus@yahoo.com.

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