Following completion of a pre-feasibility study, Sunshine Gas Limited (ASX Code: SHG) has signed a Heads of Agreement (HOA) with Sojitz Corporation to jointly develop a mid-scale liquefied natural gas (LNG) plant at Gladstone on Queensland’s central coast.
The proposed 500,000 tonne-a-year plant will be scalable and supplied from Sunshine’s Lacerta Coal Seam Gas (CSG) Project (ATP 795P & 767P SHG 100%) which currently has 3P reserves (Proven, Probable and Possible) of 1,097 petajoules, including 469 PJ in the 2P category and 44PJ in the 1P category.
Lacerta’s 1P and 2P reserve volumes are expected to significantly increase over time as a result of further production programs to be undertaken by Sunshine Gas.
Sunshine Gas and Sojitz are also discussing the possibility of using gas from other CSG fields owned by Sunshine to supply additional feed stock to the project.
Under the HOA, Sojitz will have a 70 percent operating stake in the LNG plant, with Sunshine Gas holding the balance. Sunshine Gas and Sojitz are also contemplating the direct upstream involvement of Sojitz in the Lacerta Project at up to a 20 percent interest level.
Sunshine Gas Managing Director Tony Gilby said work on permitting by consultant RLMS would start immediately while Front End Engineering and Design (FEED) was being scheduled to begin during the first quarter of 2008.
Mr Gilby said the parties aimed to have the project’s bankable feasibility study completed by the end of calendar 2008 and production underway during the first quarter of 2012.
“Sojitz is a major player in the global energy market and has brought together a firstclass international engineering firm, as well as a leading energy marketer (LNG Japan), to deliver the key project elements,� he said.
Mr Gilby said the project had the potential to be of great economic significance to Sunshine Gas by transforming the Company into a major Australian energy supplier and exporter.
“Apart from the creation of hundreds of construction and permanent jobs, the development of this project would generate significant export income for Australia and open up Queensland’s CSG gas supply market to the benefits of international pricing,� he said.
Mr Gilby said the parties were in the advanced stage of negotiations with the Queensland Government to secure an appropriate site in Gladstone for the LNG plant.
“The plant, designed initially to produce 500,000 tonnes of LNG a year, will be smaller than others that have been publicly proposed to date,� he said. “However, we think this factor, combined with the calibre of our partner Sojitz Corporation and that of the other participants, will deliver a significant strategic advantage by allowing us to expedite development.�
The decision to proceed with the various aspects of the project is subject to respective board and shareholder approvals of Sunshine Gas and Sojitz Corporation.
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