Ann: Project Restructure To Give Arrow LNG Produc, page-26

re: Ann: AOE: Project Restructure To Give Arr... Cheers pogues think your post sums situation up well. will be good to hear other views. more later money to be made.
also wintermute as pogues keeps telling me its good to share (really not getting why, pogues) see below
also HC'ers it requires reading is uncondensed, important points un highlighted & making your own decision required so if your posts usually consist of a sentence or repeating fluff read no further.

Japanese firms show interest in Australian coal-seam gasExplore related topics
ConocoPhillips Golar LNG Ltd Story
Quotes

TOKYO (MarketWatch) -- Some major Japanese liquefied natural gas users are now showing interest in LNG made out of coal seam gas, something most have been cool about until now, providing a shot in the arm to several major Australian projects.

With multibillion dollar investment decisions required in the next year or so on several coal seam gas/LNG projects in the Gladstone region of Australia's Queensland province, the operators are racing to line up customers and investors.

Large-scale projects planned for Gladstone include one by BG Group (BG.LN), a joint venture between ConocoPhillips /quotes/comstock/13*!cop/quotes/nls/cop (COP 52.64, +0.06, +0.11%) and Origin Energy Ltd. (ORG.AU), and another between Santos Ltd. (STO.AU) and Petroliam Nasional Bhd.

The Santos partners are due to make a final investment decision within six months.

Now, major Japanese companies including Tokyo Gas Co. (9531.TO), Chubu Electric Power Co. (9502.TO) and Toyota Tsusho Corp. (8015.TO) talking about buying this type of "lean LNG", so-called due to its lower calorific value than conventional LNG made from natural gas.

Both Tokyo Gas and Chubu Electric are major LNG users, typically consuming about 10 million tons a year each.

Japanese buyers have so far been cautious about committing to CSG LNG as they'd need to reconfigure their equipment to accommodate the gas or boost calorific value by adding liquefied petroleum gas, and due to potentially hazardous blending issues.

Japan is an obvious target for Australian-based LNG sellers, given its role as the world's largest LNG importer by volume.

Adding to Japan's attractiveness is the failure of the U.S. to emerge as a major market for gas from Australia, despite expectations it would, said Takayuki Nogami, senior analyst with Japan Oil, Gas and Metals National Corp.

Toyota Tsusho, partly owned by Toyota Motor Corp., said Friday it has purchased a 15% stake in a coal seam gas block from AJ Lucas Group Ltd. The block is one of a large number of coal seam gas blocks that could feed BG Group's (BG.LN) LNG project in Queensland. BG plans to produce 7.4 million metric tons of LNG from its first phase, and to start LNG production in 2014.

Earlier in September, Toyota Tsusho made an initial agreement with Norway's Golar LNG Ltd. /quotes/comstock/15*!glng/quotes/nls/glng (GLNG 12.96, -.00, -0.01%) to buy around 1.5 million tons of LNG a year for 20 years from 2014 from Golar's LNG project in Gladstone.

Tokyo Gas chairman Norio Ichino says sellers of lean LNG understand the shortcomings of the product for Japanese users and are ready to offer competitive prices.

Tokyo Gas is now talking with several companies, including ConocoPhillips /quotes/comstock/13*!cop/quotes/nls/cop (COP 52.64, +0.06, +0.11%) , on long-term supply of CSG LNG.

Kentaro Kimoto, general manager of its Gas Resources Strategy and Planning Department, said last month the company is keen to support CSG projects by committing as a customer.
http://www.marketwatch.com/story/japanese-firms-show-interest-in-australian-coal-seam-gas-2009-12-20

Chubu Electric executive vice president Haruhiko Asano said his company is taking it seriously, and that it bought one lean LNG cargo from Egypt for testing purposes. That cargo "merged well with richer one in a tank," he said.

However, other Japanese utilities remain unconvinced due for technical and financial reasons.

A senior executive with Tokyo Electric Power Co. (9501.TO) says his company isn't interested, saying major new investments would be needed in storage and other facilities, there could be safety considerations, and that plenty of new conventional LNG supplies were due to arrive in the market.

Masanori Kataoka, Kansai Electric Power Co.'s (9503.TO) executive officer of fossil fuel agrees: "Why take unnecessary risks over safety when we can buy rich LNG?"





Coal Seam Gas - to be or not to be? Part one

Coal Seam Gas (CSG) is one of the fastest growing sectors in the Queensland resources arena but there are currently a number of factors which could inhibit its full potential.


By Jeames McKibben*

More than half of Queenslands electricity is generated from gas and more than half of this from CSG.
The sectors growth has largely been in response to the State Governments call for 15 per cent of all domestic electricity production to be derived from natural gas sources by 2010.
Further support has been provided by recent rises in fuel and electricity costs, increased public awareness of environmental issues and solutions, the paucity of viable, low cost energy alternatives and the proximity of abundant coal resources to Australias urbanised coastal fringe.
On the export front, Queensland CSG is the requisite source for five LNG development projects, with the LNG product likely to be exported to meet increasing global demand for natural gas, particularly in rapidly industrialising regions of Asia. This will require significant capital resources and regulatory support to ensure the appropriate infrastructure is available to transport and produce the quantities necessary to meet this burgeoning demand.
With numerous domestic and export opportunities this sector has the potential to become a major contributor to local, state and national economies through additional employment, increased tax revenues and flow-on expenditures to other industries.
So what factors are inhibiting CSGs future growth?

Resources
Although large areas are considered CSG targets, there are currently insufficient Proved CSG Reserves capable of being rapidly exploited to meet global demand. Total 2P (or Probable) CSG Reserves in Queensland are estimated at 12,174 PJ. To put this into perspective, Queensland currently uses approximately 560 PJ/annum, and thus the currently defined 2P Reserves equate to only 22 years of Queenslands current requirements, without accounting for increased demand resulting from forecast population growth.
Due to its rapid growth, the sector is stretched in terms of financial resources, labour and equipment and is experiencing difficulties keeping up with present exploration requirements. By way of example, extracting CSG gas requires considerably more drilling (up to five times more) than conventional natural gas.
Furthermore, CSG is essentially a hybrid, requiring expertise in both conventional coal and oil and gas exploration and development technologies. As such there are only a limited number of geologists and engineers with appropriate experience and understanding of these deposits. This impacts on the exploration, development and capital raising activities of many companies operating in this sector.

Groundwater impact
There is potential for reduced groundwater levels within aquifer systems (in particular the Great Artesian Basin) as a result of the extraction of in-situ water from CSG wells. Ground water levels typically need to be lowered in order to release the CSG into planned production wells. There are concerns there may be long term issues which remain to be properly assessed.

Wastewater production
A by-product of CSG production is CSG-bearing water. This water is typically classified as waste water as it has the potential for environmental harm to land and waterways, if released. Although saline and unsuitable for drinking, CSG-bearing waters are useable for coal washing and other purposes.
Until recently this coal seam gas water was piped into ponds and allowed to evaporate, but that system has now effectively been banned by the Queensland Government because the ponds were becoming sinks for salt and heavy metals extracted with the gas and water. Concern exists over the long term legacy of these evaporation ponds including the associated salt stored in them.

Impacts on rural communities
The impact on the environment (evaporation ponds, ground water depletion) will need to be addressed if local communities are to accept CSG.
The reduction of land available for primary production in some of Australias prime agricultural areas may cause a conflict between these two prime industries.
The visual impact from the associated infrastructure (drill rigs, gas wells, pipelines) is likely to cause anxiety amongst the community which will require proactive communication from the CSG companies.
Increased traffic on rural and/or property roads (noise pollution, degradation of roads) is likely to be of concern to local communities.

Infrastructure requirements
Pipelines from the CSG source to loading facilities or other markets are required and are currently being considered by a number of companies.
Export infrastructure including port facilities is required. As witnessed recently the majority of Queensland ports have limited capacity including available loading facilities and land. The LNG industry will require specialised storage, loading and ship-berthing facilities.

* Written by Jeames McKibben with input from Michelle Clarke - from Xstract Group, a team of specialist mining consultants.
For more information email: [email protected] or visit: www.xstractgroup.com


Coal Seam Gas - to be or not to be? Part two

Coal Seam Gas (CSG) is one of the fastest growing sectors in the Queensland resources arena but there are currently a number of factors which could inhibit its full potential.


Image courtesy of Arrow Energy

By Jeames McKibben*

To read the first part of this story click here.

The Queensland CSG Inferred Reserves are estimated to be as large as those found in the USA. The US Department of Energy reports that CSG supplies more than 7 per cent of the US gas demand and comprises more than 7 per cent of its natural gas reserves. This 7 per cent represented about 1,754 PJ in 2007. This compares to Australia's total natural gas production of 1,740 PJ in 2007/08, of which approximately half was for domestic demand.
The Queensland Government has identified gas as a key transitional fuel source for reducing the emissions intensity from electricity generation while emerging renewable and low emission coal technologies are being developed.
Since the Queensland Gas Scheme began operating in January 2005, Queensland electricity retailers and large electricity users have been required to source at least 13 per cent of their electricity from gas-fired generators. The Queensland Gas Scheme has stated that gas demand will need to increased from 13 per cent to 15 per cent by 2010, with the option to increase the target to 18 per cent by 2020.

So what is required to monetise this under-utilised resource?
. There is currently a lack of transmission capacity for CSG based power generators, with Queensland grid company Powerlink estimating that $2.9 billion will need to be spent over the next few years extending the grid to handle CSG and renewables powered generation.
. Unlike natural gas wells, CSG wells cannot be turned on-and-off which means that once developed, they must be used. If the facilities and infrastructure are ready to accept the gas this does not present any issues. However, no LNG trains are currently operational and additional LNG plants are required to be on stream for current wells otherwise they could be rendered useless.
. Exploration is easier said than done with limited resources but all future coal exploration, regardless of whether it is for coal or CSG should be expanded to capture key technical data that can be used to aid future CSG exploration and development.
. Progress studies into groundwater impacts and wastewater uses.
. Ongoing consultation with local governments and community groups over multiple land uses, including rehabilitation.
. Operational strategies with a particular focus on the integration of CSG production within existing operations.

And only then we may start to realise the CSG potential of Queensland and answer the question of whether the envisaged growth and sustainability of the CSG sector is to be or not to be?.

* Written by Jeames McKibben with input from Michelle Clarke - from Xstract Group, a team of specialist mining consultants.
For more information email: [email protected] or visit: www.xstractgroup.com

What is CSG?
CSG is a form of natural gas trapped within open fractures (called cleats) and pores within a coal seam and held in place by a combination of water and ground pressure. CSG is a mixture of hydrocarbon gases, (90 to 95 per cent) methane with minor amounts of other gases such as nitrogen and carbon dioxide.
It is important to note that conventional coal technologies do not gain any benefit from CSG, as this is largely burnt off or lost to the atmosphere during mining and processing.
By comparison, CSG technologies enable the gas inherent within coal measures to be captured and processed, thereby monetising a previously unused (and thus worthless) resource.
Once captured CSG can be used to generate electricity or be liquefied to produce Liquefied Natural Gas (LNG). Several companies are currently proposing to pipe Queensland CSG gas to liquefaction plants, where it will be supercooled to create LNG. The LNG product will then be transported around the world in purpose-built LNG tankers. Once the LNG is delivered it undergoes regasification which is a process that returns LNG to natural gas.
Within Australia, CSG is a major and increasingly important power source. CSG is currently used to supply the domestic gas industry and to supply gas-fired electricity generation facilities.
Brown and black coals reportedly generate around 80 per cent of Australias current electricity needs. However, the proposed Emissions Trading Scheme (ETS) is likely to result in the rapid conversion of many larger power stations to CSG technologies due to its lower cost and perceived environmental benefits (i.e. lower greenhouse gas emissions) relative to other fossil fuel energy sources such as coal and oil