Santos Coal Seam Gas to Produce 4 Million Tons LNG

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Researched by Industrial Info Resources (Sugar Land, Texas). Santos (NYSE:STOSY) (Adelaide, Australia) is in the process of securing a site at Gladstone, Queensland, for a project to process coal seam gas to be sold as LNG into export markets. The company has carried out an extensive feasibility and site selection studies over the past 18 months, which have led to an agreement for Santos to secure a site for the project on Curtis Island.

This is a landmark project for Santos which will underwrite the continued growth of the coal seam gas industry in Queensland and is a major step forward in the development of a new export gas industry for the state. Gladstone LNG is a natural extension of Santos’ core gas business, in line with our strength as Australia’s largest producer of domestic natural gas, including coal seam gas. Queensland has the majority of Australia’s abundant CSG resources. Our CSG reserves and contingent resources currently total over 5,000 petajoules with significant upside potential,” said Managing Director, John Ellice-Flint.

Santos constructs and operates onshore gas installations and has interests in Darwin LNG, the most recent Greenfield LNG project constructed in Australia. The new CSG project would have a single processing train of 3 to 4 million tons of LNG per annum. The investment would include upstream field development, liquefaction plant and associated infrastructure. Half of the investment is expected to be in the Gladstone plant and the balance in Bowen and Surat Basins, which will supply 170 – 220 petajoules of gas per annum.

An appointment of an engineering contractor to undertake detailed engineering studies will be made and the exploration and appraisal drilling program will be accelerated to identify proven additional CSG reserves. Planning and environmental studies, including community consultation processes, will be completed. The final investment decision should come by the end of 2009 and LNG production will then begin in early 2014.

Santos produces about 25% of Australia’s CSG and will invest 150 in the CSG business in 2007 and subject to the Gladstone LNG project’s progress will invest a further 200 in 2008.

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