Queensland Coal Seam Gas to LNG projects: Which will be first to export?

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Researched by Industrial Info Resources (Sugar Land, Texas)--Five liquefied natural gas (LNG) production plants in development in Central Queensland are competing to be the first to market.

QGC (ASX:QGC) (Brisbane, Australia), a wholly owned subsidiary of BG Group (LSE:BG) (London, England) awarded the front-end engineering and design (FEED) contract to Bechtel Corporation (San Francisco, California) for development of its Queensland Curtis LNG (QCLNG) production plant project. FEED being carried out in Bechtel's Houston office is being finalised. Bechtel was also awarded the engineering, procurement and construction (EPC) contract in February 2010. Federal environmental approval for the QCLNG project was granted in October 2010, and QGC have committed to make a final investment decision in the near future. The project will be ready to kick off almost immediately following the final investment decision, and it is highly likely that the QCLNG production plant will be the first to produce and export LNG.

The QCLNG project seems to be leading the four other LNG projects against which it is competing.

The Fishermans Landing LNG production plant is a much smaller LNG plant that will take only two years total to construct. Site preparation for the project started at the beginning of this year.

In February, Arrow Energy had agreed to purchase Gladstone LNG Pty Ltd, with the inclusion of the Fishermans Landing LNG plant and associated infrastructure for $51 million up front and additional costs as development milestones where reached. In August, Arrow Energy was acquired by CS CSG Australia Property Limited, which is a joint venture of Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) and PetroChina Company Limited (NYSE:PTR) (Beijing, China). The offer to purchase was immediately revoked, and construction of the Gladstone LNG plant is on hold until a gas supply agreement has been finalised and the go-ahead has been given to restart the project.

Metgasco (ASX:MEL) (Melbourne, Australia) has signed a memorandum of understanding to jointly conduct feasibility studies with LNG Limited for the supply of coal seam gas via 500 kilometres of pipeline from New South Wales-based fields, as well as the development of the production plant. However, the company has also signed a memorandum of understanding with FLEX LNG to conduct feasibility studies for development of a floating LNG project for utilisation of the company's gas reserves. The economic viability of both LNG options will be assessed by Metgasco. If the company opts for a floating LNG production plant, then LNG Limited will be considering other offers.

The Shell LNG plant become the Arrow Energy LNG Plant after the acquisition by CS CSG Pty Limited and development is moving at a satisfactory pace. However, this project is still awaiting federal environmental approvals, which it should obtain this month. The huge Asia Pacific LNG (APLNG) project, owned by ConocoPhillips (NYE:COP) (Houston, Texas) and Origin Energy (ASX:ORG) (Sydney, Australia) has yet to make a final investment decision or select an EPC contractor.

The GLNG development, owned by Santos Limited (ASX:STO) (Adelaide, Australia), Petronas Gas Berhad (KUL:PETGAS) (Kuala Lumpur, Malaysia) and Total SA (NYSE:TOT) (Paris, France) will follow quite closely behind QCLNG, but has yet to award an EPC contractor, purchase long-lead items or approve expenditure.

QCLNG proudly attests to being the probable first to come online of the Curtis Island LNG production plants. The only development component it lacks is an LNG supply agreement. The GLNG development project already has two 20-year supply agreements in place: 1.5 million tonnes a year of LNG to Total and 3.5 million tonnes a year of LNG to Petronas.

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