Queensland Curtis LNG project on track for Q4 production – BG Group

6th February 2014 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

Queensland Curtis LNG project on track for Q4 production – BG Group

Photo by: Bloomberg

PERTH (miningweekly.com) – Liquefied natural gas (LNG) major BG Group is on track to deliver its first LNG product from the Queensland Curtis LNG (QCLNG) project, by the fourth quarter of this year, but has decided that it will not expand the project in the near term.

BG Group reported on Tuesday that it had dropped an expansion from its capital investment focus for now, with capital expenditure set to fall to between $8-billion and $10-billion in 2015 and 2016.

The company had been contemplating a third production train for the QCLNG project, at an estimated cost of about $5-billion, with a potential approval date reportedly set for 2017.

CEO Chris Finlayson told shareholders that the first train of the $20.4-billion QCLNG project would come on-stream by the fourth quarter of this year, with the second train expected to come on-stream around six months later.

“We will ramp up QCLNG over the period 2014 to 2015. One challenge with coal seam gas is that you have to dewater the wells, with 6 to 12 months before they reach peak gas production,” Finlayson said.

“In order to optimise our upstream production profile and maximise value during this ramp up, we have contracted gas from third party suppliers during the commissioning phase. “

He noted that between 2014 and 2016, BG Group expected third-party gas to make up some 10% to 20% of supply to the plant.

“We have commercial arrangements in place at attractive prices. At plateau, we expect third-party gas to comprise only some 5% of supply.”

The QCLNG project involves the expansion of natural gas production in the Surat basin and construction of a 540 km pipeline network, to Gladstone, and an LNG plant. The company currently has committed sales contracts for some 8.6-million tonnes a year of LNG to China.