## BG Group sanctions US$15B coal seam gas to LNG project; first such ##### 31 October 2010  Estimated annual greenhouse gas emissions over the lifetime of the QCLNG project. More than half the emissions come from the LNG facility. Source: QCLNG EIS. Click to enlarge. BG Group has approved implementation of the first phase of a US$15-billion project to convert coal seam gas (CSG) to LNG—the first major commercial project to do so. The first phase of the Queensland Curtis Liquefied Natural Gas project (QCLNG) project encompasses the development of a two-train liquefaction plant on Curtis Island near Gladstone in Queensland (Australia) together with the associated upstream and pipeline facilities. BG Group will progress development and construction of QCLNG with immediate effect.

QCLNG will be operated by BG Group’s Australian subsidiary, QGC Pty Limited (QGC). QCLNG will involve expanding QGC’s existing coal seam gas production in the Surat Basin of southern Queensland; building a 730 km (454-mile) buried natural gas pipeline network; and constructing the natural gas liquefaction where the gas will be converted to LNG for export.

The first phase of the liquefaction plant will consist of two LNG trains with a combined capacity of 8.5 million tonnes per annum (mtpa). Over the next four years (2011-2014), BG Group plans to invest approximately US$15 billion in developing the liquefaction plant and related wells, field facilities and pipelines. There is also significant potential to expand QCLNG, with the construction of a third LNG train already covered by existing State and Federal approvals for a total production capacity of 12 mtpa. First LNG exports are planned to commence from 2014, underpinned by agreements in Chile, China, Japan and Singapore for the purchase of up to 9.5 mtpa of LNG. Total gross discovered coal seam gas reserves and resources presently amount to an estimated 17.3 trillion cubic feet (tcf) – equivalent to more than 2.9 billion barrels of oil equivalent—with 2P (proved plus probable) reserves now estimated at 7 tcf. In early 2008, we announced our first investment in Australia. Today, less than three years later, we are announcing our decision to develop the world’s first LNG plant to be supplied by coal seam gas and the foundation project at the center of a major new Australian export industry. —BG Group Chief Executive Frank Chapman BG Group’s decision to sanction the development of the first phase of QCLNG completes the final condition required for implementation of the Group’s agreements with the China National Offshore Oil Corporation (CNOOC), signed in March 2010. Under those agreements, CNOOC will: • Purchase 3.6 mtpa of LNG for a period of 20 years from the start-up of QCLNG; • Purchase 5% of BG Group’s interests in certain tenements in the Walloons Fairway of the Surat Basin; • Jointly participate with BG Group in a consortium to construct two LNG ships in China that would be owned by the consortium; and • Become a 10% equity investor in the first LNG train in the initial phase of the liquefaction plant. Separately, the decision to sanction the project satisfies one of the conditions precedent associated with the proposed agreements with Tokyo Gas Co. Ltd (Tokyo Gas), announced in March 2010, under which Tokyo Gas will: • Purchase 1.2 mtpa of LNG for 20 years from 2015; • Purchase 1.25% of BG Group’s interests in certain tenements in the Walloons Fairway of the Surat Basin; and • Become a 2.5% equity investor in the second LNG train of the liquefaction plant. BG Group will issue final notices to proceed to the main contractors appointed for the development of the first phase of QCLNG. Those contractors include: • Bechtel Oil and Gas, Inc., for the engineering, procurement and construction of the liquefaction plant; • WorleyParsons, for gas field facilities and infrastructure development; and • MCJV (a joint venture between McConnell Dowell Constructors (Aust.) Pty Ltd and Consolidated Contractors Company), for the transmission pipeline network. Coal seam gas and LNG. Natural gas in coals (coal seam gas) occurs when the coal is formed deep underground by a process of heating and compressing plant matter. The gas is trapped in coal seams (typically 300-600 meters underground) by water pressure. The coal seam gas is extracted via wells which are drilled down through the coal seams. The water is pumped out, and the natural gas is released from the coal. The gas is then processed to remove water and piped to a compression plant for injection into gas transmission pipelines. Liquefied natural gas (LNG), is natural gas that has been cooled to -162 ºC (-260 °F), at which point it becomes a liquid. In this form it can be transported and stored. Australia is already a leading supplier of LNG through two existing projects (the North West Shelf and Darwin LNG) which export a combined 19.6 million tonnes per annum (mtpa) of LNG. QCLNG project components. QGC will develop five principal components as part of the QCLNG Project: Gas Field Component: the expansion of QGC’ coal seam gas (CSG) operations in the Surat Basin. The Gas Field Component comprises: • Approximately 6,000 gas production wells over the life of the project with initially 1,000 to 1,500 wells across the Gas Field by mid-2014. The remaining wells will be phased in over the life of the project (20 to 30 years) to replace declining wells. • Gas- and water-gathering systems and gas processing and compression infrastructure. • Associated surface equipment, such as wellhead separators, telemetry devices and metering stations. • Field infrastructure such as access tracks, warehouses, camps (both construction and operations), office and telecommunications. • The management of Associated Water produced in the CSG extraction process on the petroleum tenements. Pipeline Component: development, construction, operation and decommissioning of a gas pipeline network of approximately 730 km to link the Gas Field Component and other nearby CSG resources to the LNG Facility. The pipeline network includes: • A 380 km Export Pipeline from QGC’s Gas Field in the Surat Basin to the LNG Facility in Gladstone. • Potentially a 150 km Lateral Pipeline which enables the connection of additional CSG fields to the Export Pipeline. • A 200 km Collection Header—a central pipeline located in an Upstream Infrastructure Corridor (UIC) to collect gas from centralized compressor facilities for delivery to the Export Pipeline. • A pipeline crossing at The Narrows connecting the mainland Export Pipeline with the LNG Facility on Curtis island. LNG Component: development, construction and operation within the Curtis Island Industry Precinct of the Gladstone State Development Area (GSDA) of a LNG processing plant (LNG Facility) with production capacity up to 12 million tonnes per annum, nominally comprising three LNG processing units (trains) with 4 mtpa production capacity each. The LNG Component comprises: • Onshore gas reception facilities. • Gas pre-treatment facilities for the removal of water and impurities from the feed gas. • Gas refrigeration and liquefaction units sized for 4 mtpa production trains. • A nitrogen rejection unit for the removal of nitrogen in the feed gas. • Three full containment LNG storage tanks with up to 180,000 m3 capacity each, with space for another if required. • A full containment propane storage tank with approximately 100,000 m3 capacity. • Jetty and docking facilities with turning basin for the loading of LNG carriers and unloading of propane ships to storage. • A material offloading facility (MOF) for ferry transportation and construction material receiving. • Associated onshore mainland facilities. • Utility requirements to support the LNG Facility. Swing Basin and Channel: comprising the development of the following: • MOF Channel - a temporary access channel to the MOF for vessel access during construction of the Project. • Curtis Spur Channel consisting of Berth Pocket, Swing Basin, Connecting Channel and upgrade of existing port channels. • Consideration of the range of options for disposal or use of dredge material from dredging activities undertaken for the above. Shipping Operations: regular transit of LNG tankers and, potentially, infrequent transit of ships carrying propane to the LNG Facility for the ‘spiking’ of LNG. Shipping operations will involve three stages: firstly, loading LNG/unloading propane at the marine jetty; secondly, transit of ships through Gladstone Harbour; and thirdly, transit of ships through the Great Barrier Reef Marine Park to open ocean. Greenhouse gases. As part of the required Environmental Impact Statement, QGC calculated greenhouse gas emissions resulting from the construction and operation of the QCLNG project. Emissions were calculated using the default emissions factors provided in the National Greenhouse and Energy Reporting System (NGERS), developed and endorsed by the Australian Government. Over the operational life of the project, QGC calculated total project GHG emissions of 94,972,214 tCO2-e—the majority of that (51,900,601 tCO2-e) resulting from the liquefaction plant. The majority of remaining emissions result from compression and processing at the FCSs and CPPs in the Gas Field Component area. The project design is employing advanced and more efficient technology, including aero-derivative gas turbines in the LNG Facility. This resulted in a 27% reduction in greenhouse gas-emissions intensity from concept to current design as presented in the Environmental Impact Statement (EIS). As a result, the LNG facility will be one of the more emissions efficient of its kind, QGC said. Resources ### Comments "BG Group sanctions US$15B coal seam gas to LNG project; first such" for a single LNG project in Australia.

Meanwhile, US$2B for US EV research and support is highly criticized. The EV is a threat to powerful interests. LNG? No problem. Corn farmers, Shale Gas, NG & Coal, Oil, Tar Sands and similar interested groups will soon gang together and will spend$B to fight the arrival of electrified vehicles and all governments who support EVs.

Unfortunately, the majority of us will believe their propaganda.

That's the type of evolution path we have taken? We are all for sale?

Just ignorant and easily led; buy the opinion-leaders and the rest usually follow.

Why bash Australia for developing domestic energy? Isn't domestically produced energy, by any country, better than imported energy? Maybe they will eventually be able to mix in biomass eventually - like miscanthus pellets. Eventually, when the coal is gone, maybe they will produce LNG via 100% biomass, grown by Australian farmers.

Unfortunately the CO2 emissions involved in extracting and liquefaction of this clean energy source make it dirtier in a Co2 sense per unit of energy delivered than gasoline, diesel and propane.
It is not as bad as coal but when you account for the fact that a heap of this will be shipped halfway across the world and a bunch will leak then my guess nearly as bad as coal.
So LNG from coal seam methane is no solution to greenhouse.

SVM that's probably true, but if the methane is going to leak anyway it make sense to make use of it and turn it to CO2

My comment concerned British Gas Group tossing $15B into LPG while$2B for EV assist is too much for US politics.

The project being in Australia is just incidental to a multinational corporation.

Not so fast SVM this gas has none of the pollutants that are normally present when burning coal such as mercury and cadmium.

Quite soon, the limit of burning fossils will not be the availability of fossils, but the limit on CO2 emissions.
It is obvious that every important country will within a few years limit its CO2 emissions at a certain level (probably by different strategies, but still there will be a limit on emissions, not specifically a limit on fossil-consumption).
Therefore, it is very sound to switch to the least carbon-intensive fossil fuel (which is CH4), and later-on to even decrease this use, or sequester the emitted CO2 somewhere else.
Secondly, extraction of CH4 is probably the least polluting method of extracting fossils (compared with mountain top mining or oil spills)

The next step could be using methane clathrate, of which the reserves are enormous.

If the technology is matured to scavenge the CO2 (which is very probable), a sustainable use of CH4 is likely.

IF the CO2 is captured, methane combustion is much more environmentaly friendly than biomass combustion.

If australia (or anyone) manages to produce lots of sustainable H2, they could combine it with captured CO2 to produce CH4. With the LNG infrastructure already operational, CH4 is the most suitable conventional fuel to transport H2.

Hate to nitpick but I think LCSG is a better term than LNG since NG comes from marine sediments while CSG is terrestrial. Also I doubt at 600 metres depth the CH4 is going to make it to the surface on its own anytime soon. As usual h. sapiens speeds up the process.

These customers lined up to buy LCSG must have had a memory lapse about promised carbon cuts on the way home from the climate conference. Therefore Australia should slap a carbon tax on LCSG, say $40 on top of an f.o.b. price of maybe$400 a tonne. The money would go on fossil fuel phaseout schemes. If Australia decided to use CNG and CCSG as an oil import replacement the liquefied gas exports may not seem like such a good idea.

Queensland's set to bring three times as much coal to export as NSW.
NSW recently doubled it's Newcastle port handling which was at the time the worlds largest.

Queensland also has mandated 1,000 extra requirements relating to this coal seam gas in addition to the 400 federal regulations.
This reflects community concerns over the processes.

Queensland is also pioneering stranded coal deposit Coal Gas to Liquids.

So while Australia is on target to meet the relevant greenhouse carbon abatement targets in line with international obligations, it will do so by exporting climate change to places like China and India.

Coal seam gas projects to the value of \$40 billion currently on the books.

Water use in the region 5-20 Million Megaliters.
The eqivalent to 1 X Sydney Harbour P.A. of 'ground water will be used. the disposal of this saline waste water is problematical.
One proposal is to use 250 acre evaporation ponds followed by on site burial.
discharge to streams and waterways after treatment is also problematical.

4 BTX banned carcinogenic chemicals are known to be present in the used fracing water. (though the companies complain that they do not use harmful chemicals, that these do in fact leach out)

Salty heavy metals, raw methane from fractured bores.
Slow leakage from poorly capped abandoned bores and the 450miles of uground pipeline as well as other machinery will be intensified by the 22X greenhouse gas number for methane.

One can see the merit in claims that these LNG alternatives are not much better than the other 'Alternatives'.

Meanwhile investment incentives in renewables continue to be cut.

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