Methane Rita Adrea enters Gladstone Harbour yesterday to take on the first shipment of LNG gas from Curtis Island. Picture: Murray WareSource: Supplied
AUSTRALIA’S export liquefied natural gas industry on the east coast has begun with a large ship berthed in Gladstone Harbour filling up with the first batch of LNG made from coal-seam gas in western Queensland.
The British Gas-owned Methane Rita Andrea is bound for Asia when it leaves Gladstone in the next few days, its final destination depending on who is willing to pay top dollar for its liquid cargo.
Australia exports about 24 million tonnes of LNG worth about $14 billion from the North West Shelf off Western Australia, but what is happening in Queensland is a world first: converting coal-seam gas to LNG for export.
Combined, the two industries, one off the west coast and the other one the east coast, have the potential to make Australia the biggest exporter of LNG .
The federal government has forecast that LNG exports could rise to 80 million tonnes by 2018, valued at $60bn.
The new Queensland industry promises much. A 2013 study claimed it would deliver $22bn in revenue to the state government through royalties and payroll tax and $162bn in revenue to the federal government over the next 20 years.
The BG plant is the first of three $20bn plants being built at Curtis Island on the northern shore of Gladstone Harbour that will convert the coal-seam gas to liquid natural gas. The other two are set to come on stream in the next year.
While the output of the other two plants will largely be sent to specific destinations, BG is a large spot trader and already sends ships into Asia carrying liquid natural gas. The specific destination of the Methane Rita Andrea will be guided by which buyer needs the LNG next week.
The construction of the three giant plants has led to 40,000 people being employed; after the construction phase tapers off, the industry estimates it will employ up to 18,000 in long-term jobs.
The industry looms as Queensland’s economic saviour. At a time when coal prices are down and the coalmining industry is shedding jobs, the arrival of the coal-seam gas into liquid natural gas industry is forecast to lift the state’s economic growth from 2.5 per cent this year to 5.75 per cent in 2015-16, taking Queensland from one of the slower growth rates to the fastest.
It is also an industry that many see as putting groundwater in farming areas at risk and possibly contaminating much of Australia’s most productive farmland.
So far, about 5000 farmers have signed access agreements with coal-seam gas companies that will allow the companies to place wells, many only the size of a basketball court, on the farmer’s property. There are 6000 wells on Queensland’s western Darling Downs, but as the industry grows, more wells will be drilled as others dry up — in total, there could be up to 40,000 wells sunk in the gasfields around Chinchilla and Roma over the next 20 years.
The movement of Australian gas into the global market will also push up domestic gas prices. People overseas are prepared to pay more for gas than in Australia, so local prices will also rise.
Gas has been running through the specially-built pipeline from the gasfields to Gladstone for about a year, and once it reaches Gladstone, it is placed in what is effectively a giant freezer and converted to liquid form for transport. When it reaches the other end, the process is reversed and the liquid is heated until it turns into gas again.
A spokesman for BG Group, which came into the industry when it took over Queensland Gas in 2008, said the mechanical testing of the plant had finished and the storage tanks were yesterday being cooled, ready to produce and store sales LNG.
“This is done by cooling the gas to -162C. The process reduces the gas by about 600 times its original volume, making it easier to transport economically over vast distances. There remains work to do, but we are on schedule to start loading LNG into the first ship to carry a cargo from Curtis Island.”
It’s taken about 10 years to get the industry to this point, after coal-seam gas was seen as a far more environmentally friendly fuel source than coal as its greenhouse gas emissions are considerably less than coal.
The original proponents of an export coal-seam gas industry were all Australian companies, but all have partnered with large overseas energy giants to make the projects viable.
The opposition to the industry has come together under the banner of Lock the Gate, and its president, Drew Hutton, said there had been an unseemly haste to push the industry.
“In years to come, people will look at the decisions made now and the way we’ve sacrificed good farmland and water for an industry which has such a limited future,” he said.
“Coal-seam gas, like coal itself, will end up as a stranded asset as people realise that the future is in renewable energy … what we’ll see in the next 20 years is the impact on the underground water supply, which will put at risk some of our best farming land.”