British gas firm BG Group yesterday announced it will spend US$15 billion on a liquefied natural gas (LNG) project in Australia, an investment Canberra hailed as a boost for the national economy.
The investment will expand existing coal seam gas production in Queensland state and go towards the construction of a 540km underground pipeline linking gas fields to a pioneering new LNG plant.
BG Group, one of several companies seeking to convert Queensland’s rich coal seam gas deposits into LNG for export to meet surging Asian demand, made the final investment decision after receiving environmental approval on Oct. 22.
The firm’s chief executive Frank Chapman said the investment would develop the world’s first LNG plant to be supplied by coal seam gas and be the foundation project at the center of a major new Australian export industry.
“Today’s decision represents the realization of a pivotal strategic objective for BG Group — to further the globalization of our LNG business by establishing a new and material source of equity LNG in the Asia-Pacific arena,” he said in a statement.
First LNG exports of up to 9.5 million tonnes a year from Curtis Island, just off the east coast town of Gladstone in the lower reaches of the Great Barrier Reef, are expected to begin in 2014.
“We have binding commitments with LNG customers in China, Japan, Singapore and Chile, and we will also continue to provide gas to markets in eastern Australia,” said Catherine Tanna, managing director of BG Group’s Australian subsidiary QGC, which will operate the project.
Tanna said Curtis represented the single biggest investment ever undertaken by BG Group, one of Britain’s largest companies, and would have an operating life of at least 20 years.
Australian Acting Prime Minister Wayne Swan said the development was one of the country’s largest capital infrastructure projects and represented a milestone for the national economy.
“By any measure, this is a very significant project for the Australian economy,” Swan said. “It is not every day that a company can make an announcement that they can invest US$15 billion.”
“This is a vote of confidence in the attractiveness of Australia as a place to invest and do business,” he said.
Swan said the project would deliver 5,000 direct jobs during the construction phase and in its first stage deliver one-third of Australia’s total LNG production.
The BG Group project was one of two approved by the Australian government on Oct. 22 with strict environmental conditions, clearing the way for exports of millions of tonnes of clean-burning energy to Asian countries.
The other, the Gladstone Liquefied Natural Gas (GLNG) joint venture between Australia’s Santos, Malaysia’s Petronas and France’s Total, is also expected to make a final investment decision by the end of the year.
Rival proposed coal gas joint ventures between Origin Energy and ConocoPhillips, and Royal Dutch Shell and PetroChina, are yet to apply for environmental approval.
The firms plan to use pioneering technology to cool gas taken from underground coal seams into liquid and ship it abroad, mainly to Asia, as LNG gains favour because it burns more cleanly than other fossil fuels.