Huge $8b gas plant project for Gladstone
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By Anthony Marx
February 03, 2008
GROWING global hunger for clean-burning natural gas has spurred plans for an $8 billion project in central Queensland expected to create more than 5000 jobs.
In what could be the largest liquefied gas development in Australia for more than a decade, joint venture partners Queensland Gas and UK-based BG Group announced yesterday that the project would be built near Gladstone.
Plans call for a processing plant, a 380km pipeline and development of coal seam gas fields, with the first export shipments expected by 2013.
The initiative, which is the fourth of its kind planned in the state, is tipped to yield up to 4 million metric tons of gas a year and to generate about $25 billion in revenue for Brisbane-based Queensland Gas over 20 years.
“This project puts Queensland’s gas on the world stage and transforms QGC from an explorer and producer to a fully integrated energy company with outstanding growth potential,” said managing director Richard Cottee.
World demand for natural gas is forecast to more than double by 2015.
Premier Anna Bligh welcomed news of the project, which she said would deliver a “royalties windfall,” to the state, generate hundreds of permanent jobs and help in the battle against global warming.
“LNG (liquefied natural gas) is a key transition fuel as we move away from traditional fuels,” Ms Bligh said.
“A gas-fired power station emits half the greenhouse gases of a coal-fired station.
“As well, coal seam gas contains only about 3 per cent carbon dioxide and the carbon dioxide produced can be pumped back into the coal seam as part of the gas extraction process.”
An added benefit will be that part of the gas extraction process produces large volumes of underground water – equivalent to about a quarter of Brisbane’s annual consumption – which can be used after further processing to help drought-stricken areas.
According to State Government mandated targets, energy retailers and other large electricity users have to source 13 per cent of their electricity from gas-fired generation.
That will rise to 18 per cent by 2020, a change expected to boost private sector development of the gas market.
BG Group announced on Friday that it had secured a $663 million stake in Queensland Gas, which was launched nine years ago and is now worth more than $2.5 billion.
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New duo in race to sell gas to Asia
Matt O’Sullivan
February 4, 2008
QUEENSLAND Gas has joined the race to export liquefied natural gas to Asia after signing an $8 billion deal with the British gas giant BG Group to build a processing plant and 380-kilometre pipeline in eastern Queensland.
The two companies yesterday unveiled plans for a liquefied natural gas export plant, likely to be built near Gladstone, producing between 3 million and 4 milllion tonnes of the gas a year.
Sales to Asia are scheduled to begin in 2013. It is BG Group’s first foray into Australia.
The companies will each invest $4 billion in the project to pipe coal-seam gas from Queensland Gas’s tenements in the Surat Basin to the plant. Queensland Gas already supplies the domestic market in the state’s south-east from the basin.
BG Group, formerly known as British Gas, will pay £229 million ($498 million) for a 10 per cent stake in Queensland Gas and a 20 per cent interest in its coal-seam gas assets in the Surat Basin in south-west Queensland. The deal will give BG one seat on Queensland Gas’s board.
Queensland Gas’s managing director, Richard Cottee, said the deal meant that “in one fell swoop we have doubled the value of our resource” because it could sell gas for twice as much overseas.
However, Mr Cottee said at least 20 per cent of the gas extracted would be dedicated to the domestic market, helping to allay fears of a spike in gas prices in Australia due to the growing export trade.
The deal caps off a spectacular rise, from a minnow just a few years ago to a company whose market value stands at $2.5 billion.
Queensland Gas said yesterday the project meant it could forecast annual pre-tax earnings of $800 million by 2014.
Last financial year it posted pre-tax earnings of just $4.9 million.
Although the partners are yet to finalise the site for the gas plant, Mr Cottee said it was most likely to be built near Gladstone.
It is the fourth coal-seam gas project planned for eastern Queensland after similar plans from Santos, Arrow Energy and Liquefied Natural Gas.
The managing director of business development for BG, David Maxwell, said it would establish a presence in Brisbane to oversee the Australian operations and to consider further investments in Asia.
In October BG, one of Britain’s 10 largest companies, and Oil Search put on hold plans for a second liquefied natural gas project in Papua New Guinea, after failing to obtain enough gas for the potential joint venture.
But Mr Maxwell said the company had not “walked away from PNG” and its search for “an Asian source” was continuing.
Talking up the green credentials of natural gas, the Queensland Premier, Anna Bligh, said the project brought other economic opportunities to the state’s south-east, because the production process involved significant extraction of water.
Queensland Gas estimates the project could yield as much as 20 per cent of what Brisbane consumes.
Shares in Queensland Gas rose 4 per cent, or 13c, to $3.42 on Friday before the company was placed in a trading halt pending yesterday’s announcement.
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