coal seam gas exports to china

Coal-seam gas exports to China in pipeline.
Andrew Fraser From: The Australian March 02, 2011 12:00AM

PLANS are proceeding for a new export-oriented coal-seam gas area on the Queensland-South Australia border, with processing plants at South Australia's Port Bonython.
Gold Coast-based Icon Energy has a memorandum of understanding with Chinese gas company Shantou SinoEnergy to buy 40 million tonnes of liquid natural gas (LNG) converted from coal- seam gas (CSG), over 20 years.

Icon, along with South Australia-based Beach Energy, is drilling for CSG in the Nappamerri trough of the Cooper Basin.

Icon's plan is to take CSG from this field and pipe it to Port Bonython near Whyalla in South Australia and then export it to Shantou in China, where it will be re-gased and used commercially.

This is similar to the model being adopted in Queensland, where three projects now have state and federal government approval to take coal-seam gas from southern and western Queensland and liquefier it at Gladstone before exporting it to Asia.

Many of the Gladstone projects plan for eventual capacity of up to 9 million tonnes a year, but the Icon/South Australian project is only aiming for 2 million tonnes a year.

Beach already exports liquefied petroleum gas through the Port Bonython terminal operated by Santos, and Icon plans to build up this terminal.

While the Queensland CSG project is the most advanced at the moment, a similar opportunity is being pursued in the Gunnedah Basin in NSW with processing at Newcastle.

Icon managing director Ray James told the Coal Seam Methane world conference in Brisbane yesterday that while the big projects in Gladstone and southern Queensland were attracting most attention, there was plenty of activity among smaller operators such as Icon. "The first challenge for the medium-sized operators is to get a market, and that's what we've done both through micro-LNG and signing an MOU with Shantou," he said.

"Our next challenge is to upgrade that MOU into something far more tangible, and that's something that we'll be working on in the next couple of months.

"But in the meantime, for us smaller companies, there's still a big market in Australia in micro-LNG. Diesel fuel is one, but anywhere in Australia that currently uses LPG, there's an opportunity there for LNG."

The obvious problem for the Cooper Basin is that its remote location makes development more difficult, an issue exacerbated at the moment because much of the area is flooded.

Even though roads are cut off at the moment, Mr James sees the isolation of the Cooper Basin as a plus.

"All of the sorts of problems they're having now around Dalby you just wouldn't get out in the Cooper Basin, because so few people live out there," he said.

While the Queensland government is coming under pressure from farmers and some political groups over the coal seam gas industry, the South Australian government has proved far more welcoming.

South Australian Premier Mike Rann has met Icon Energy and encouraged Icon to explore the South Australian option.