csg takeovers likely: brisbane csg conference

Coal seam gas takeovers likely: Brisbane coal seam gas conference

Andrew Fraser
From: The Australian
March 30, 2010 12:00AM

A BRISBANE coal seam gas conference will be told today that there could be further consolidation in the sector as more overseas projects spring up.

Mining analyst Peter Strachan said Origin and the BG Group appeared to be "co-operating" in Queensland's Surat Basin and Gladstone, while Arrow and Shell appeared to be combining for the one project.

"So we may see three projects going forward, although all projects are ultimately market-driven," he told The Australian yesterday.

Mr Strachan, a Perth analyst who will provide an overview of the industry this morning at the start of the two-day conference, said Australia was rapidly developing a liquid natural gas industry based on coal seam methane, but other countries were also developing such an industry, and these could squeeze the Australian operations.

"China, for example, is becoming a strong consumer of LNG, and while it is currently importing about 7 million tonnes a year, it will have the capacity to take 50 million tonnes by 2013," he said.

"But China is developing an industry of its own, while it also plans to take gas from Russia via a pipeline.

Other countries such as the US and Qatar are developing their own industries, so some of those projects which are aiming to start up by 2015 might be closer to 2020."

If all the LNG projects currently on the drawing board went ahead they would produce 23 million tonnes per annum, Mr Strachan said, but he could only see room for 10 million tonnes annually by 2020, "so consolidation is inevitable and has already begun".

The industry had progressed massively this century, he said, and an analysis of listed coal-seam gas companies showed their market capitalisation had increased by $12.9 billion since 2006, although $1.8bn of that was raised by the companies themselves.

Of the nearly $11bn increase in market capitalisation, the big movers had been Queensland Gas ($4.7bn), Arrow Energy ($3.1bn) and Sunshine Gas ($1bn).

Other speakers at the conference include Clarke Energy managing director Greg Columbus and Queensland Resources Council chief executive Michael Roche, while Hutchinson Builders managing director Greg Quinn will discuss accommodating workers in remote areas.

BG Group last week signed Australia's largest liquefied natural gas deal, with China National Offshore Oil -- a $60bn contract to supply 3.6 million tonnes of LNG annually for 20 years.

http://www.theaustralian.com.au/business/coal-seam-gas-takeovers-likely-brisbane-coal-seam-gas-conference/story-e6frg8zx-1225847171696