the age newspaper 5/8/2006Qld Gas aims to put squeeze on Rod...

the age newspaper 5/8/2006

Qld Gas aims to put squeeze on

Rod Myer
August 5, 2006
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THE development of coal-seam methane (CSM) projects and the rising cost of pipeline construction look likely to squeeze the $8 billion Papua New Guinea-to-Queensland gas project out of the Queensland gas market.

When launching Queensland Gas Company's $59.7 million rights issue to fund the growth of its CSM operations, managing director Richard Cottee said the expansion would make it hard for the PNG project to gain markets.

"There's no need at all for the eastern seaboard to be worried about energy security," Mr Cottee said.

"It can be fully supplied from coal-seam gas (CSG) and I foresee that offshore gas will be (turned into) LNG (liquefied natural gas) and exported."

Mr Cottee said the cost of putting in the PNG pipeline to the northern shore of Torres Strait was running at about $US2.5 billion ($A3.3 billion). "That's our (the CSG industry's) total cost of production. It's a fair distance from the Torres Strait to Sydney and Melbourne, and steel pipeline costs are up enormously."

Shaw Stockbroking analyst John Colnan said he did not think coal-seam gas would keep PNG gas out of Australia altogether, but growth in CSG production would leave PNG gas servicing only Sydney and some significant new industrial developments in northern Australia.

QGC's 1-for-4 equity raising will close on September 4.

QGC shares closed up 3¢ yesterday at 80¢ after coming out of a trading halt.