announcement pending, page-2

Favourable Feasibility Study Outcomes support purchase of Project Site
Eastern Star Gas Limited (ASX: ESG; OTCQX:ESGLY) is pleased to confirm that arrangements for
purchase of the 24 hectare parcel of land on Kooragang Island, Newcastle, became unconditional
on 14 January 2011. Purchase of the site, which will house ESG??s LNG Newcastle Project, will be
completed in late February 2011 upon payment of the final balance of $22.5m.
In announcing finalisation of the land purchase arrangement Mr David Casey, Managing Director of
Eastern Star Gas, commented that ??completion of the land purchase reflects the Company??s
confidence in the LNG Newcastle Project with a number of important milestones now realised??.
??The investigation into the feasibility of developing an electric motor driven, mid-scale LNG
Project on the Kooragang site, funded by our partners Hitachi Limited and Toyo Engineering
Corporation, was completed at the end of last year with favourable outcomes. Forecast project
costs are well and truly competitive with industry best practice, while the size and operational
flexibility of the project are ideally suited for supply from an upstream coal seam gas project. We
expect to announce commencement of front end engineering and design work within the next few
weeks??.
??Approvals processes are underway. A Preliminary Environmental Assessment for the LNG
Newcastle Project should be submitted to the Department of Planning within days??.
??And we are absolutely delighted by the support we are receiving from the business community of
Newcastle. Eastern Star Gas is working with relevant authorities on matters ranging from water
and high voltage electricity supply through to identification of potential LNG loading berth
locations. Eastern Star Gas is confident the ongoing assistance and input of these key
stakeholders will help to ensure the proposed LNG plant achieves the highest standards of safety,
environment and efficiency??.
Over coming months all aspects of the LNG Newcastle Project will be advanced, as will upstream
gas pipeline and gas production activities. ESG is progressing field work at Narrabri, a key aim of
which is to achieve further upgrades of certified gas reserves. Although the Narrabri CSG Project
has escaped the severe flood related problems seen in Queensland, recurring wet weather in the
Narrabri region continues to delay activities including corehole drilling and commissioning of the
Tintsfield production pilot. While this is very likely to result in further delay to the next round of
gas reserves upgrades, it will not impact overall marketing or project development activities, all
of which remain on track.
Mr Casey concluded ??development of the Narrabri CSG Project and the LNG Newcastle Project will
not only deliver economic benefits to NSW through job creation and capital investment, it will
also see the state achieve self-sufficiency and security of gas supply??.
Eastern Star Gas Limited ABN 29 094 269 780
LNG Newcastle Project Update
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About LNGN
The LNG Newcastle Project (LNGN) is a key step in the commercialisation of the significant reserves of gas
held by ESG in the Narrabri Coal Seam Gas Project.
ESG proposes to use electric motor driven mid-scale LNG technology at Newcastle. Pairs of 0.5 million
tonne per annum liquefaction units will be installed in 1 million tonne per annum (MMtpa) trains. ESG has
purchased the 24 hectare parcel of land on Kooragang Island as a site for the LNGN Project. It is
envisaged the site will be capable of accommodating capacity up to 4 MMtpa.
LNG will be stored on site for loading into specially built LNG carriers. As an established port in close
proximity to Narrabri, Newcastle is the stand-out location for a gas liquefaction and export project.
Approvals processes, arrangements for port access, and water and electricity sourcing arrangements are
being progressed
The advantages of electric motor driven mid-scale technology
The electric motor driven, mid scale, single mixed refrigerant technology offers multiple advantages,
especially for LNG projects fed by coal seam gas, including:
?h?n Low capital cost and quick construction, owing to modular design;
?h?n High reliability, high efficiency and low environmental impact;
?h?n Operational flexibility and train size ideally suited for coal seam gas; and
?h?n Small footprint and low noise are ideal for Kooragang Island location.
Project ownership and timetable
ESG is working with Hitachi
Ltd, Toyo Engineering
Corporation and other
specialist organisations with a
view to committing to
development of the LNGN
Project by around the end of
2011 with potential for first
LNG export by 2015.
It is anticipated purchasers of
LNG from the LNGN Project will
also take equity in Project.
Project benefits
The LNGN Project will deliver
significant benefits to NSW
including employment, capital
investment and enhanced
security of gas supply as well as
Royalty income.