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

• QCLNG Draft and Supp EIS