QCLNG EPCM contract awarded, EIS comments answered

The project involves an $A8 billion onshore CSG to LNG production and export facility on the Queensland coast. The supply of 190 PJ/a of CSG from QGC’s Surat Basin tenements will be carried via a 340 km, 42 inch diameter pipeline to the processing facilities on Curtis Island, near Gladstone. Materials and equipment for the construction of the pipeline is now being purchased.

Meanwhile, BG Group subsidiary QGC has lodged a supplementary environmental impact statement (EIS) for the project.

The supplementary EIS includes changes that will reduce the impact of plant noise on neighbouring residents with clearly defined site selection processes, the use of electric drive machines and enclosures around engines and compressors. QGC released a draft EIS for public comment in August 2009.

QGC has said that the project’s gas field development plans have been refined to provide greater certainty for landholders about QGC’s activities for the next five years and beyond, and a significant amount of work has been done on plans for beneficial use of water produced in the extraction of coal seam gas (CSG).

QGC is continuing to work with the Queensland Government and other companies on options for water use and will build reverse osmosis plants to ensure the water is treated to acceptable standards, including for use in agriculture. The relevant state and Federal agencies will now review the EIS before determining whether the project may proceed.

Subject to approval of the EIS, construction of the project is set to commence in the second quarter of 2010, following a final investment decision, with LNG production to commence in 2014.

In addition, BG Group has increased the planned capacity of the project. In its annual strategy update and full year 2009 results, BG Group Chief Executive Officer Frank Chapman said that the LNG processing plant and export terminal at Curtis Island will now have an initial production capacity of 8.5 MMt/a from two LNG trains, with the potential for a third train. The company had initially designed the plant to produce a capacity of 7.4 MMt/a of LNG.

Mr Chapman said that up to 6,000 gas production wells at the company’s Surat Basin tenements have been planned over the life of the project, including an initial 1,800 wells to be drilled across the gas fields by mid-2014, an increase from initial estimates of 1,500 wells. The company has 37 wells planned for the Surat Basin region, and has said that resources in the Bowen Basin will also be utilised in future potential expansions.

“At the moment, we’ve identified 12.7 Tcf of CSG in the Surat Basin – we also have 1.3 Tcf of domestic CSG obligations. We are working to prove up more reserves and in time that will support a further train of LNG,” Mr Chapman said.

The project has been underpinned by deals with China, Chile and Singapore to provide 8.3 MMt/a of LNG. BG Group signed an LNG Project Development Agreement with China National Offshore Oil Corporation in June 2009 to purchase 3.6 MMt/a of LNG for a period of 20 years from the start up of the project, as well as 5 per cent of BG’s interest in the reserves and resources of certain tenements in the Walloons fairway of the Surat Basin.

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