http://www.theaustralian.com.au/business/burke-ticks-off-on-santo...

http://www.theaustralian.com.au/business/burke-ticks-off-on-santos-bg-gas-plans-for-gladstone/story-e6frg8zx-1225942457708

Burke ticks off on Santos, BG gas plans for Gladstone
Matt Chambers From: The Australian October 23, 2010 12:00AM

ENVIRONMENT Minister Tony Burke has given conditional approval for more than $30 billion of coal-seam gas export projects at Gladstone.

The approval paves the way for the east coast's biggest single resource project investment to be sanctioned as early as next week.

After two previous schedule delays, Mr Burke said BG Group's Queensland Curtis LNG project and the Santos-operated Gladstone LNG project had yesterday received federal environmental approval, subject to conditions, including strict groundwater monitoring and water treatment requirements.

Adelaide-based Santos and London's BG needed the approval by the end of the month if they were to meet their targets of a final investment decision by the end of the year.

The huge projects plan to pipe coal-seam gas from thousands of wells in the Surat and Bowen basins to Gladstone, where it will be converted to liquefied natural gas in the multi-billion-dollar plants to be build on Curtis Island.

BG has been itching to pull the trigger on its Curtis Island project since before the federal election, which delayed a decision that had been expected from Mr Burke's predecessor, Peter Garrett.

A BG spokesman yesterday said the company was reviewing the conditional approval and would not make a decision until it fully understood the conditions.

BG could approve its project -- which could cost up to $19bn -- as early as next week, given it had held up a final investment decision while waiting for approval.

Santos will take a little longer as it finalises financing and development costs and tries to seal a sales deal with Korea Gas that is waiting on Korean government approval.

BG is planning to approve a two-train LNG project in one hit, while Santos will approve a first train this year and a second next year.

Santos chief David Knox gave no indication that he saw the environmental conditions as potential deal breakers.

"The environmental approval is another significant milestone for GLNG as it builds towards a final investment decision later this year," Mr Knox said.

"We acknowledge the federal government's commitment to encouraging the development of the coal-seam-gas-to-LNG industry, which promises billions of dollars of investment and the creation of thousands of jobs."

The key conditions relate to monitoring of the groundwater to prevent impacts on agricultural land and the Great Artesian Basin.

"Water pressure must be maintained above conservative thresholds," Mr Burke said.

"If those thresholds are exceeded, the companies must have plans ready to re-establish pressure. This may involve reinjection or other suitable methods of replacing groundwater to restore water pressure."

A Santos spokesman said the company was comfortable with the water requirements that had been put in place.

Deutsche Bank analyst John Hirjee said the conditions would probably lead to increased capital expenditure and operating costs.

He now estimated that a two-train LNG project would cost $18bn-$19bn, up from a previous estimate of $17bn.