CSG-LNG consolidation makes sense
THERE has been more talk of consolidation coming to Queensland’s burgeoning coal seam gas-to-liquefied natural gas sector.
In Perth to host an open night on the University College London’s offerings for Australia’s resources sector, head of UCL’s School of Energy and Resources Professor Tony Owen told PetroleumNews.net he didn’t think it was likely all five of the major CSG-LNG projects would go ahead.
“They’ll combine,” he said. “It just doesn’t make sense to have five separate entities within stone’s throw of each other developing, it’s too expensive. So I think you will see some amalgamation taking place.”
Arrow Energy’s Fisherman’s Landing project on Curtis Island is the smallest of the five proposed CSG-LNG projects but could be the first operating, with first production targeted for late 2012 or early 2013.
The remaining four projects – Gladstone LNG, Queensland Curtis LNG, Australia Pacific LNG and Shell Australia – are earmarked for first production around 2014.
Talk of possible mergers in the CSG-LNG sector is not knew. Earlier this year, Arrow chief executive Shaun Scott said the industry was headed for consolidation as rival ventures looked for cost efficiencies, while Origin Energy managing director Grant King said there was no way the projects would be able to start at the same time.
More recently, Shell executive director Upstream International Malcolm Brinded flagged that the major was in consolidation talks with other companies planning to build CSG-LNG projects at Gladstone.
According to Professor Owen, the problem with CSG-LNG was the huge up-front investment needed to get the projects off the ground.
“One has to be really confident that one’s going to be able to sell the gas at a price which is going to give you a reasonable profit over a long period of time,” he said.
“Natural gas off the North West Shelf often comes with significant deposits of condensate which the company can recover and sell to the market at a very high price in the early years. Coal seam methane hasn’t got that.
“The other fact about coal seam methane is that lots of holes have to be drilled in order to get sufficient supplies of gas to make LNG viable, so it’s going to be very interesting.”
The School of Energy and Resources, a partnership between UCL, the South Australian state government and Santos, is offering a variety of executive courses for professionals in the energy and resources fields.
The school is also offering Australia’s first Master’s degree in Energy and Resources to promote vital academic research in the resources sector.
Thursday, 22 October 2009
PNN
APPEA blasts extension of NSW fraccing ban
