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BG invests further $1.2bn in Australian gas outlets

Queensland Gas Company has set up an agreement that will feed the company’s LNG export prospects down under

The BG-owned Queensland Gas Company has announced a two-year, A$1.7bn ($1.2bn) development plan for its coalbed methane holdings in Australia’s Surat basin, west of Wandoan. The gas will be used to supply its pioneering LNG export project on Curtis Island and also customers in Australia.

QGC has a 73.75% interest in the blocks and its share of the investment is within its previously disclosed capital expenditure program, it said 16 November. The cost is shared with its joint venture partners: China National Offshore Oil Corporation and Tokyo Gas. The investment follows the receipt of federal and state environmental approvals.

Since April BG has been the object of a friendly cash-and-shares takeover plan by Anglo-Dutch major Shell, which is expected to close early next year subject to shareholder approval.

The works are part of the continuous development of QGC’s holdings in the Surat Basin to sustain natural gas supply to both domestic customers and the two-train Queensland Curtis LNG (QCLNG) liquefaction plant on Curtis Island, near Gladstone.

The development, known as Charlie, involves 300-400 wells; a large field compression station; and associated pipelines and facilities which will feed into existing gas processing and water infrastructure at Woleebee Creek.

QGC’s managing director Tony Nunan said: "This is a vote of confidence in the secure, long-term future of Queensland’s natural gas industry, which will employ Queenslanders for many years to come.” It builds on the success of the world-first production of LNG from coalbed methane. The QCLNG plant has delivered 62 cargoes since first LNG production in December 2014.

There are two other projects following the same model: Australia’s Santos also has a coalbed-methane-to-LNG plant on Curtis Island, at Gladstone, which started up this year; and there is Australia-Pacific LNG, owned 25% by Chinese Sinopec and 37.5% each by Origin and ConocoPhilips. That project is in the commissioning process.

Shell and PetroChina own Arrow Energy, which also produces gas in the Surat basin for sale in Queensland. They bought the company in 2010 with an eye to developing the reserves for export as LNG.

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