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$24.7b Australian Pacific LNG project to start this month

Projects

APLNG project blog post plantminer
Posted by Sophia Rostron

The Australia Pacific LNG project is a coal seam gas (CSG) to liquefied natural gas (LNG) project delivering a cleaner, greener sustainable energy source. It will be a source of major investment through to 2020, creating around 10,000 jobs throughout the life of the project, increasing local skills and boosting regional economies. Origin Energy recently confirmed November as the date for the long-awaited start-up of its $24.7 billion project in Queensland, making it the third of the state's huge gas export projects to begin production this year. 

Project: Australia Pacific LNG is already the largest producer of gas from coal seams in Australia, supplying gas to power stations to produce lower emissions electricity to major industrial customers, homes and businesses in South East Queensland. The Project will see an increase in gas production to supply an export market, as well as to further supply gas-fired power stations, major industrial customers and residents throughout Queensland. The Project’s domestic production is currently equivalent to more than 40 per cent of Queensland’s gas requirements. The LNG Facility currently under construction on Curtis Island, near Gladstone will receive and process the natural gas by cooling it to -161˚C until it becomes a liquid, enabling transport to export customers in Japan and China.

The project consists of three key parts: 

  1. Further development of Australia Pacific LNG’s gas fields in the Surat and Bowen Basins in south-west and central Queensland.
  2. Construction of a 530km gas transmission pipeline from the gas fields to an LNG facility on Curtis Island off the coast of Gladstone.
  3. Construction of an LNG facility on Curtis Island off the coast of Gladstone, with the first two gas production trains processing up to 9 million tonnes per annum.



Size
: Two processing trains, each with the nameplate production capacity of 4.5 mtpa

Joint venture partnership: Origin Energy 37.5%; ConocoPhillips 37.5%; Partners Sinopec 25%

Cost: A$24.7 Billion for two trains

Reserves:  2P reserves 13,382 PJ; and 3P reserves 16,155 PJ (as at 30 June 2013)

Off-take:  7.6 mtpa LNG supply for 20 years to

Agreements: JV partner Sinopec; 1 mtpa LNG supply for 20 years to Kansai Electric

Origin Energy Forecast: Angela Macdonald-Smith of the Australian Financial Review recently reported on Origin's gas venture:

Origin's head of integrated gas, David Baldwin, said the first LNG cargo would be shipped from the plant in Gladstone "a few weeks thereafter".

The news of the milestones came in a quarterly production report that saw Origin's oil and gas output rise 13 per cent in the September quarter from the June quarter, to the equivalent of 47.8 petajoules. Revenues still slid by 1 per cent to $224.5 million because of lower prices.

Ahead of the start-up the APLNG venture is selling some gas to fellow Queensland LNG exporter BG Group, but the prices are linked to oil and include a fixed component that allows BG to make a return on its export venture. That makes those sales to BG's Queensland Curtis project "barely profitable," Macquarie analyst Ian Myles noted.

Origin this week completed the last stage of a $2.5 billion equity raising that will allow it to immediately reduce its debt, which has been lifted by funding required to complete APLNG.
Origin's key partner in the project, ConocoPhillips, has meanwhile reassured investors that the biggest customer for APLNG, China's Sinopec, is set to take its full take-or-pay sales from the venture, despite the weak Chinese gas market.
However it acknowledged that some concessions to Sinopec have been made, by allowing the Chinese customer and partner to re-sell cargoes.
"We've also given them the right to divert cargoes outside China, but as a take-or-pay contract and with a price formula  that's tied to oil," Conoco executive vice president finance Jeff Sheets said in a September quarter briefing.
"We don't have any concerns ... about the sanctity of that contract."
Contributions to communities and the economy: Development of the Australia Pacific LNG Project will bring many benefits to the economies of regional communities, Queensland and Australia.
  • The Project will create thousands of jobs – more than 10,000 during the construction period, and over 1,000 once the project is operational from 2015.
  • Every effort is made to engage and support local businesses and suppliers, with A$9 Billion spent on contracts and suppliers in Australia (over 80% of the Project’s spend), and of that, A$7.2 Billion spent in Queensland to date.
  • A constructive relationship with local communities, landowners and all levels of Government, and the Project has committed to $200 million of investment in community funding, roads and transport infrastructure, upgrades to regional airports and local training opportunities.
  • Respect farmers, their families, their land and their livelihoods, and we make every effort to minimise disturbance to property, lifestyle, animals and crops.

Sophia Rostron

Sophia Rostron

As the Content editor at plantminer.com.au, Sophia works behind the scenes to keep our blog machine in motion. A student of Law and Business, she's very dependent on coffee and loves any excuse to travel.