BOC to Invest $59 Million to Upgrade Australia's Dandenong Plant as Part of East Coast LNG Highway

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Researched by Industrial Info Resources (Sugar Land, Texas)--The gas supplier BOC Australia Limited (Sydney, Australia), which is a member of industrial gas and engineering company the Linde Group (ETR:LIN) (Munich, Germany), has announced that it intends to invest almost $59 million to upgrade its liquefied-natural gas (LNG) processing plant in Dandenong, Victoria, Australia.

The company, which was previously known as the British Oxygen Company and, later, BOC before being taken over by competitor Linde in September 2006, will invest in an upgrade to the air separation unit and LNG facilities at the Dandenong plant, as a part of the $178 million plan to establish an LNG "highway" along the east coast of Australia.

The upgrade to the Dandenong plant is expected to be completed by the middle of 2012, and will increase the capacity of the plant to upward of 100 tons of LNG each day.

BOC announced in March this year that it had signed a long-term gas agreement with QGC Pty. Limited (Brisbane, Australia), a leading Australian coal-seam gas explorer and producer, and a member of the international natural gas company BG Group plc (LSE:BG-L) (Reading, England), for the supply of coal seam gas for a 15-year period starting in July next year.

BOC intends to build a micro-LNG processing plant close to the QGC gas fields in the Surat Basin in Queensland, which will have a capacity to produce 50 tons of LNG each day, or the equivalent of about 70,000 liters of diesel fuel. BOC will then become the first company in Australia to produce LNG from coal-seam gas.

The LNG produced from the Dandenong plant and the micro-plant in Queensland will be used to complete an interstate chain of eight LNG refueling stations stretching from Victoria, through New South Wales and on up to Queensland, for use by the interstate trucking industry as a replacement for diesel fuel.

Natural gas has a proven track record as a fuel source for vehicles, being extensively used in transport. Up to 10 million vehicles worldwide use natural gas, including public transport buses in most of Australia's state capital cities of Sydney, Melbourne, Adelaide, Perth, Brisbane and Canberra.

Proponents of natural gas as an alternative fuel to diesel point out that natural gas has far less carbon dioxide and other greenhouse gas emissions, and has a more stable price structure than conventional hydrocarbon fuels. According to the Alternate Fuels Conversions Trials Program sponsored by the Australian Commonwealth Government between 2005 and 2008, LNG produces about 20% fewer emissions than diesel fuel when used in transport.

Construction of the new micro-LNG plant in Queensland is expected to begin early next year, subject to the required development proposals being approved. The plant will be a joint venture between BOC and QBC, with the latter assisting in the supply of land and utilities and BOC expected to invest about $88 million on the construction and long-term operation, exclusive of the cost of the gas itself.

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