Fishermans Landing LNG Project in Queensland Struggles with Gas Supply

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Researched by Industrial Info Resources Australia (Perth, Australia)--Despite its location near the epicentre of a liquefied natural gas (LNG) development in Gladstone, Queensland, the Fishermans Landing LNG Project is still struggling to gain traction. While the construction of Queensland's three giant coal seam gas (CSG)-to-LNG projects continues, project owner Liquefied Natural Gas Limited (ASX:LNG) (Perth, Western Australia) has not secured a large enough supply of gas for its planned, mid-scale LNG facility.

Originally, the company had an agreement with the Arrow LNG project to purchase the required CSG; however, when the Arrow project was sold to Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) in 2010, the agreement fell through.

LNG Limited then struck a deal with PetroChina Australia, a subsidiary of PetroChina Company Limited (NYSE:PTR) (Beijing, China), China's largest oil & gas producer and distributor. The intention of the agreement was for PetroChina to acquire the necessary gas permits through the acquisition of other small Australian gas companies. In November 2012, PetroChina Australia completed the purchase of Molopo Energy Limited's Queensland gas assets. As the gas delivery volumes from Molopo Energy were insufficient to supply the LNG plant, PetroChina then commenced due diligence and negotiations to purchase Westside Corporation, which holds gas assets adjacent to those of Molopo Energy.

However, the purchase of Westside Corporation was not finalized, and in May 2013 PetroChina announced it would no longer pursue Australian gas assets, saying that "the general situation in Australia has changed so much."

At the time, LNG Limited's Managing Director Maurice Brand said that "this is an unexpected development, particularly given the lengthy period of the due diligence process and negotiations in respect of the Westside acquisition."

LNG Limited continues to search for a viable supply of CSG in order to build what it says will be a revolutionary LNG facility. With patents filed in more than 20 countries, LNG Limited believes its method of LNG production, called "Optimised Single Mixed Refrigerant" (OSMR), leads to an overall plant efficiency 30% more productive than the industry standard, with a 30% reduction in carbon emissions.

LNG Limited is optimistic that a supply of gas will be sourced soon, and it hopes to make its final investment decision as early as July 2014.

According to Brand, LNG Limited "remains firmly of the view that the LNG Project provides a lower cost alternative to other LNG projects in Australia and an opportunity for gas suppliers, with uncommitted gas resources, to access higher international gas prices. We will be using all endeavours to secure such gas resources for the LNG Project."

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