BG Group loads first LNG from Australia's Curtis project

British oil and gas major BG Group Plc said yesterday that it has loaded the first cargo of liquefied natural gas (LNG) from its Queensland Curtis LNG facility, the world's first LNG project to be supplied by coal seam gas (CSG).

The cargo bound for China was loaded onto Methane Rita Andrea, a vessel of 5.1 million cubic feet capacity, designed specifically to carry the super-cooled gas.

The $20.4-billion QCLNG project is operated by BG Group's Australian subsidiary QGC Pty Ltd.

It took over four years to develop and construct the first of the two LNG trains, amid cost overruns due to currency fluctuations and the rising cost of labour and materials.

Unlike conventional LNG projects which convert standard natural gas into a liquid for transportation, the QCLNG project relies on supplies of coal seam gas, which is locked in underground coal deposits.

QCLNG's interim executive chairman Andrew Gould said: ''This is an immense achievement which demonstrates the company's ability to deliver a highly complex LNG project.''

The second train of the project is scheduled to go on stream in the third quarter of 2015 and the company expects to achieve full production capacity of 8.5 million tonnes per annum (mtpa) of LNG in 2016.

QCLNG's major customer is China's CNOOC, which has already contracted to take 3.6 mtpa over 20 years. Other buyers include Tokyo Gas, GNL Chile, Chubu Electric, and the Energy Market Authority of Singapore. Total sales commitments for the project amount to nearly 10 mtpa.

The second LNG cargo from the facility is expected to be loaded in the first week of January.

Reading, UK-based BG Group, UK's third-largest oil and gas company after Shell and BP, is active in exploration and production in more than 24 countries on five continents.

The QCLNG project consists of more than 2,000 onshore gas wells spread over 4,500 in Surat basin in southern Queensland, a 540-km pipeline, and a liquefaction facility, storage and jetty on Curtis Island near Gladstone on Australia's east cost.

BG Group holds around 74-per cent interest in the upstream resource and infrastructure and 100-per cent ownership on the facilities on Curtis Island.

Earlier this month, BG Group agreed to sell its 100-per cent equity interest in the 540-km pipeline to Australia's gas infrastructure company APA Group for $5 billion. (See: BG Group sells Australian LNG pipeline to APA Group for $5 bn)

BG Group had said that the object of the sale is to reduce the company's debt and fund its growth plans, and it is in line with the company's strategy of focusing on its core areas of oil and gas exploration and production.

BG Group's Q3 earnings fell 29 per cent to $729 million while revenue was up 4 per cent at $4.58 billion. The company had a debt of $11.1 billion as at the end of the quarter.

The QCLNG is the first of a series of new LNG projects coming up in Australia, which are promoted by energy majors, including Origin Energy, ConocoPhillips, Santos, Petronas, Royal Dutch Shell, Chevron and ExxonMobil. On completion of the projects, Australia is expected to overtake Qatar as the world's biggest LNG producer by 2018-2019, with a projected capacity of over 84 mtpa.