Australia's Origin Energy Commissions Third Coal Seam Gas Plant in Queensland

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australian energy company Origin Energy Limited (ASX:ORG) (Sydney) has launched the third in a series of coal seam gas power plants in its Spring Gully development, 80 kilometers north of Roma in South Queensland, Australia.

The project was initiated in June 2005 at a cost of $150 million to exploit the large reserves of coal seam gas found underground in Queensland. Coal seam gas refers to methane, which bonds itself to coal in the coal seam, unlike natural gas that is normally found in pores in sandstone or other porous rocks. Gaps in the coal seam are normally filled with water. The pressure of water ensures that the coal seam gas remains as a thin film on the surface of the coal. Coal seam gas can be used as a substitute for natural gas in commercial applications and domestic appliances.

The underground reserves of coal seam gas in Queensland are vast and virtually inexhaustible, prompting some commentators to draw comparisons between the oil fields in the Middle East and the coal seam gas fields in Queensland. Although coal seam gas is currently a more expensive form of energy than coal, the increasing emphasis on green energy sources is expected to reduce the cost of coal seam gas.

In July 2006, Origin announced plans to invest a further $87 million to double the production capacity to 85 terajoules per day, after the discovery of higher-than-expected volumes of high-quality coal seam gas. This was followed in April 2007 with the announcement that a further $40 million would be invested to increase production by 20 terajoules per day and to construct a reverse-osmosis water treatment plant at the complex. Water is produced as a byproduct of the coal seam gas recovery process. A six-month trial has shown that high-quality water could be recovered along with coal seam gas.

The new plant in Taloona adds a further 36 terajoules per day to the production capacity at Spring Gully, bringing the total daily capacity up to about 150 terajoules per day. In all, there are now more than 400 kilometers of pipelines within the project, carrying coal gas and water from about 160 wells to the three gas processing plants.

Gas from the Spring Gully plants can cater to up to 25% of the gas requirements of Queensland and is supplied to consumers in New South Wales as well as Queensland through the Wallumbilla gas distribution hub, located east of Roma. Connection of the Taloona plant to the Wallumbilla hub was achieved without having to shut down gas flow through the main pipeline.

In October 2008, Origin announced that it had received $5 billion to form a 50:50 joint venture, Australian Pacific LNG, with ConocoPhillips (NYSE:COP) (Houston, Texas) to convert Origin's reserves of coal seam gas to liquefied natural gas (LNG).

Australian Pacific LNG will develop the large reserves of coal seam gas to produce 14 million tons per year of LNG for onward distribution to the Asia-Pacific region and other international markets. A final investment decision is expected by the end of 2010. LNG production is scheduled to begin in 2014.

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