Friday, 21 January 2011

Santos green-lights $16b CSG project

Courier Mail
14 January 2011, Page: 28

ABOUT $31 billion of investment is to be unleashed in Queensland after Santos and its partners yesterday announced the go-ahead for a $US16 billion ($A16.2 billion) coal seam gas development, the second of the controversial projects to be approved.

Adelaide-based oil and gas explorer Santos, which owns 30% of the Gladstone LNG (GLNG) project, and offshore partners Petronas, Total and Kogas, said the decision to proceed meant orders would immediately be placed for pipes, compressors and LNG plant components. Up to 1500 jobs are expected to be created between now and June.

Last October, UK-based BG Group became the first to give final investment clearance to a major project to convert coal seam gas from the Surat and Bowen Basins into LNG for Asian and domestic energy markets at processing plants at Gladstone. Its Queensland Curtis LNG project, to be operated by BG Group unit QGC, involves $US15 billion spent on two LNG processing lines or trains and wells, field facilities and pipelines.

BG Group expects first LNG exports from 2014. Santos's schedule sees first shipments from its two-train project in 2015. Santos chief executive David Knox said he didn't expect any impacts on the project from Queensland's flood disaster. "We're confident we will achieve first gas in 2015. We've got sufficient flexibility in our schedule. We will gradually ramp up this year in terms of staff numbers. Our peak employment isn't until 2013", Mr Knox said.

State and federal environmental approvals granted last year had cleared the way for the GLNG and QCLNG partners to take their final investment decisions. The environmental approvals came despite calls from agricultural industries, water management groups and environmentalists for a comprehensive scientific analysis of water impacts from CSG mining to be conducted.

The National Water Commission last month issued a major report on CSG mining risks in areas such as the Surat Basin, which is part of the Murray-Darling Basin and lies above the Great Artesian Basin. National Water Commissioner Chloe Munro said the CSG industry "risks significant, long-term and adverse impacts on surface and groundwater systems". She stressed that the potential impacts of CSG projects over a significant time period "are not well understood".

CSG mining involves bringing saline underground water to the surface in order to release trapped gas, and there are fears that water networks will be depleted or contaminated. The NWC raised major concerns with water practices proposed by CSG miners and issued recommendations for state and federal governments, including that CSG miners obtain licences for any water extracted.

The NWC said the CSG industry could extract 7500 gigalitres of water from groundwater systems over 25 years, or about,300GL a year. Currently, Australia's total extraction from the Great Artesian Basin is about 540GL a year Mr Knox said that he was not aware of the NWC recommendations.

New England MP Tony Windsor has said he will use his balance of power position in Federal Parliament this year to force CSG miners to conduct assessments of long-term, regional impacts of their controversial practices, either before exploration licences are granted or if necessary before mining proceeds. Santos shares closed up 2.2%, or 29¢, at $13.45.