bg lng plant delayed

BG's coal-seam gas exports delayed by slow plant start-up

MATT CHAMBERS |
The Australian |
January 29, 2014 12:00AM

QUEENSLAND will have to wait until at least the December quarter for its first coal-seam gas exports, with British gas giant BG Group flagging an extended start-up period for its $US20.4 billion ($23.5bn) Queensland Curtis LNG plant at Gladstone.

BG Group, expected to be the first of three giant liquefied natural gas projects to ship from Gladstone Harbour's Curtis Island, has narrowed what was a second-half 2014 target for first exports to the last quarter.

"That reflects the complex and extended start-up process that we need to go through for the plant," BG chief executive Chris Finlayson said as he fronted investors after cutting BG's 2014 global production guidance because of problems in Egypt and writing down US and Egyptian assets by $US2.4bn.

Last month, BG piped the first CSG on to Curtis Island as it prepared to launch its LNG plant that will freeze the gas for export.

"The good news is we have substantially de-risked this (project) through completion of the pipeline and the delivery of gas to the island," Mr Finlayson said.

The gas will be used to commission turbines at the project, a process that requires a relatively low flow rate.

CSG flows into the QCLNG project are expected to ramp up to 200 terajoules a day by the middle of year and then 600 to 700 terajoules when the plant starts exporting.

"We are confident that our upstream development plan is on track to meet this demand," Mr Finlayson said.

The main concern about the Gladstone plants is whether they can pump enough gas from the thousands of onshore CSG wells in the early years of production.

The ramp-up of the three plants represents a four-fold increase in eastern state gas demand and CSG production, at a scale and speed not seen anywhere in the world.

Asked whether BG would need to buy more gas, Mr Finlayson said: "We have sourced third-party gas that we believe is sufficient for the start-up phase.

"But as I've said before, if we find opportunities to source attractive third-party gas allowing us to defer our own capital expenditure, it is clearly something that we will be interested in pursuing."

Origin Energy has the largest and best-quality CSG resources in Queensland.

Despite building its own LNG plant at Gladstone with US major ConocoPhillips, it has agreed to supply extra gas to BG and the Santos-led Gladstone LNG project.

Shell and PetroChina, which have recently indicated they will not build a fourth $20bn LNG project on Curtis Island to export their large Arrow gas resource, are other potential sellers, but the pair appear more likely to want to use their gas for a large-scale use.





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