Rick Wilkinson
OGJ Correspondent
MELBOURNE, Feb. 4 -- Brisbane coal seam methane producer Queensland Gas Co. has teamed with the BG Group to propose construction of a 3-4 million tonne/year gas liquefaction plant on the east coast of Queensland.
This makes the fourth proposal for LNG from coal seam methane in Queensland over the past 12 months following similar plans from Santos, Arrow Energy, and Sunshine Gas.
Queensland Gas says its facility will use a feedstock of 190 petajoules/year drawn from its Surat basin fields in the State's southeast.
The project is expected to cost $8 billion (Aus.) and will require construction of the LNG facility, to begin production in 2013, and a 380 km pipeline.
The company has not specified a location for the plant, but it is likely to be near the port of Gladstone, which is the chosen location of the other three LNG hopefuls.
The BG Group will pay $250 million to purchase 9.8% of Queensland Gas' issued shares. In addition it will pay an additional $415 million in cash for 20% of Queensland Gas' interests in the Surat coal seam methane acreage.
Queensland Gas will receive a further $207 million cash for the sale of an additional 10% stake when a final investment decision is made on the construction of the LNG plant and certification of 7,000 petajoules of 2P gas reserves.
Finally, BG Group has agreed to buy the whole of the planned LNG production under a 20-year contract.
To prove up sufficient reserves for the deal Queensland Gas is planning a $230 million exploration program to increase the current level of its certified 2P gas reserves (1,317 petajoules) to the required 7,000 petajoules.
At the moment the company has more than 7,255 petajoules of reserves and contingent resources as assessed by independent consultants Netherland Sewell & Associates.