Australia Pacific LNG and QGC Agree on Framework for Development of Common CSG Tenements

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Australia Pacific LNG (APLNG) (Brisbane, Queensland) and QGC Pty Limited (QGC) (Brisbane), a subsidiary of BG Group plc (OTC:BRGYY) (Berkshire, England), have agreed on a framework to develop the jointly owned ATP 648P and ATP 620P coal seam gas (CSG) tenements in southeast Queensland in a bid to support their respective liquefied natural gas (LNG) ventures. APLNG is a 50:50 joint venture formed by ConocoPhillips (NYSE:COP) (Houston, Texas) and Origin Energy Limited (ASX:ORG) (Sydney, Australia).

The agreement allows for efficient use of gas reserves and management of production facilities. The two stakeholders also have agreed on the mutual sale of gas from the reserves. Accordingly, APLNG is looking to market about 190 petaJoules (PJ) of gas during the initial two years of operations to QGC. Subsequently, QGC will receive about 25 PJ of gas over the next 18 years, the validity of the sale contract being 20 years. QGC has been offered two extension terms, each spanning five years. In the long run, APLNG will independently market its share of gas from these resources.

The significant aspect of this sale is that the gas feed will coincide with the commencement of operations of QGC's venture, the Queensland Curtis LNG project. However, the sale of gas and the development of the CSG fields are subject to the condition that QGC finalizes its investment decision on the Queensland Curtis LNG project, which is set to be brought online by 2014.

Apart from the long-term gas deals, the companies have consented to market gas from the ATP 620P tenement on a short-term basis. This deal will be effective for two years from the start of operations of the Queensland Curtis LNG project. The exact volume of gas to be made available to each party will be decided based on the progress of the development of the fields. The framework agreement also provides means for the companies to simultaneously proceed with the technical design and evaluate the conditions required to begin developing the CSG fields.

Coal seam gas, a natural gas variant formed from compressed plant matter, is mainly constituted by methane. The gas is generally bound underground by interspersed enveloping water channels. Removal of water from these channels releases the water pressure, and hence the gas. Alternately, the coal seams themselves can be fractured to harness the gas.

APLNG has the largest CSG reserves in Australia. The firm holds a permit interest of 31.25% in the ATP 648P tenement and of 40.63% in the ATP 620P tenement, both of which are operated by QGC. APLNG's LNG project spans the Surat and Bowen Basins and the LNG facility at Laird Point on Curtis Island with a 450-kilometer pipeline connecting the two locations.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.