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Researched by Industrial Info Resources Australia (Perth, Australia)--BG Group plc's (BG) (Reading, England) $23.2 billion Queensland Curtis LNG (liquefied natural gas) (QCLNG) project has started up production. The Methane Rita Andrea tanker began loading LNG from the Curtis Island facility on December 28. QCLNG is the world's first LNG project to be supplied from coal seam gas, according to BG Group.
At full capacity, the QCLNG will produce 8.5 million tonnes per year (MM T/yr) of LNG from two 4.25 MM MT/yr trains. BG is reviewing the possibility of adding a third 3.5 MM T/yr train, which would increase the capacity of QCLNG to 12MM MT/yr.
Since starting construction in 2010, BG and its wholly owned Australian subsidiary, Queensland Gas Company Limited (QGC) (Queensland, Australia) (ASX: QCG), have overcome many logistical challenges. One of the biggest challenges was installing the 540-kilometer underground pipeline that connects BG's inland gas fields to the QCLNG plant. Overall, the construction phase at QCLNG has been much smoother than other Australian LNG projects. Projects like Chevron Corp.'s (NYSE:CVX) (San Ramon, California) Gorgon development on Barrow Island have been hindered by logistical, political and environmental roadblocks.
The other two LNG projects in Queensland are scheduled to start exporting LNG in the next 12 months. LNG cargoes from the three projects, which are worth more than $70 billion in total investment, will be shipped to countries like China, Japan, Korea and Malaysia.
In addition to the three LNG projects in Queensland, there are four in Western Australia (WA) that will start production over the next five years. Chevron's $54 billion Gorgon project will be the first to start production in the second half of 2015. The boom in LNG projects is expected to move Australia ahead of Qatar to become the world's largest LNG exporter by 2018.
The start of production at QCLNG is untimely for BG and its investors. The price of LNG has fallen dramatically in 2014 and LNG spot prices in Asia now sit at their lowest levels since 2011. As of late November, the benchmark LNG price for Japan and South Korea was $10.20 per million British thermal units (MMBTU), down from $18 per MMBTU in January. Most analysts have identified plummeting oil prices, slowing Chinese growth, declining Korean imports and the start-up of production at Exxon Mobil's (NYSE:XOM) (Irving, Texas) $19 billion Papua New Guinea project as the main causes of the LNG price decline. A sustained decline of LNG and oil prices, which analysts benchmark LNG against for pricing, will threaten the $70 billion worth of proposed LNG projects in Australia, which are considered the second wave of the country's energy boom.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
At full capacity, the QCLNG will produce 8.5 million tonnes per year (MM T/yr) of LNG from two 4.25 MM MT/yr trains. BG is reviewing the possibility of adding a third 3.5 MM T/yr train, which would increase the capacity of QCLNG to 12MM MT/yr.
Since starting construction in 2010, BG and its wholly owned Australian subsidiary, Queensland Gas Company Limited (QGC) (Queensland, Australia) (ASX: QCG), have overcome many logistical challenges. One of the biggest challenges was installing the 540-kilometer underground pipeline that connects BG's inland gas fields to the QCLNG plant. Overall, the construction phase at QCLNG has been much smoother than other Australian LNG projects. Projects like Chevron Corp.'s (NYSE:CVX) (San Ramon, California) Gorgon development on Barrow Island have been hindered by logistical, political and environmental roadblocks.
The other two LNG projects in Queensland are scheduled to start exporting LNG in the next 12 months. LNG cargoes from the three projects, which are worth more than $70 billion in total investment, will be shipped to countries like China, Japan, Korea and Malaysia.
In addition to the three LNG projects in Queensland, there are four in Western Australia (WA) that will start production over the next five years. Chevron's $54 billion Gorgon project will be the first to start production in the second half of 2015. The boom in LNG projects is expected to move Australia ahead of Qatar to become the world's largest LNG exporter by 2018.
The start of production at QCLNG is untimely for BG and its investors. The price of LNG has fallen dramatically in 2014 and LNG spot prices in Asia now sit at their lowest levels since 2011. As of late November, the benchmark LNG price for Japan and South Korea was $10.20 per million British thermal units (MMBTU), down from $18 per MMBTU in January. Most analysts have identified plummeting oil prices, slowing Chinese growth, declining Korean imports and the start-up of production at Exxon Mobil's (NYSE:XOM) (Irving, Texas) $19 billion Papua New Guinea project as the main causes of the LNG price decline. A sustained decline of LNG and oil prices, which analysts benchmark LNG against for pricing, will threaten the $70 billion worth of proposed LNG projects in Australia, which are considered the second wave of the country's energy boom.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
