There is significant interest in the development of a liquefied natural gas (LNG) sector in Queensland based on processing coal seam gas (CSG). As the CSG-LNG sector presents both opportunities and challenges for the state, the Queensland Government is conducting a review to help shape its policy response.

What is LNG?

Liquefied natural gas or LNG, is a natural gas - primarily methane (CH₄ ) - that has been converted to a liquid for ease of storage and transport.

How is LNG manufactured?

The gas fed into a LNG plant is treated to remove water and other contaminants such as carbon dioxide, nitrogen, oxygen and sulphur compounds. It is then chilled to -162°C in order to liquefy it, making it 1/600^th of its gaseous volume. This enables it to be shipped economically around the world in cryogenic tankers.

An LNG plant consists of one or more LNG processing trains. Each train is an independent production unit for gas liquefaction.

LNG is not stored under pressure and will burn rather than explode if exposed to an ignition source after it has returned to its gaseous state.

What are the proposed LNG projects for Queensland?

There are currently seven proposed LNG projects for Queensland:

• Santos Ltd/Petronas proposes to develop a LNG plant on Curtis Island near Gladstone with an initial capacity of three to four million tonnes per annum (Mtpa) and the potential to increase production to 10 Mtpa. The first LNG cargo from the project is expected to occur in 2014. The proposal also includes the further development of Santos gas fields in the Bowen and Surat basins and construction/operation of a 450km gas pipeline linking the fields to Gladstone.

• BG Group (BG)/Queensland Gas Company (QGC) also proposes to develop a LNG plant on Curtis Island near Gladstone with an initial capacity of three to four Mtpa and the potential to increase production to 12 Mtpa. The first LNG cargo is expected in 2013. The proposal includes the further development of QGC’s CSG fields around Miles in the Surat Basin and the construction/operation of a 430 km pipeline linking the fields to Gladstone.

• LNG Limited/Arrow proposes to develop a LNG plant at Fisherman’s Landing in Gladstone. The plant’s initial capacity is expected to be 1.5 Mtpa and to commence operations in 2011. Arrow and Shell have purchased the Central Queensland Gas Pipeline (CQGP) to facilitate delivery of gas from Arrow’s North Bowen Basin tenements to the proposed LNG plant at Gladstone. An additional train is proposed to be added within two years of the commencement of operation increasing total output to about three Mtpa.

• Sunshine Gas/Sojitz Corporation proposes to establish a mid-scale LNG plant at Fisherman’s Landing in Gladstone to produce 0.5 Mtpa of LNG. The first cargo is planned for the first quarter of 2012. In the second stage production will increase to one Mtpa.

• Impel (Southern Cross LNG) proposes to construct an open-access LNG terminal on Curtis Island near Gladstone. The LNG plant would have a capacity of 0.7–1.3 Mtpa and would be built in stages. Impel also proposes to build an open access, 400km long pipeline (the Southern Cross Gas Pipeline) to Gladstone. Production is expected to start in 2013.

• ConocoPhillips/Origin Energy proposes to construct a four train LNG plant on Curtis Island near Gladstone. The project will use Origin’s Queensland CSG reserves. The first train is expected to begin production in 2014 (3.5 Mtpa), the second train in 2015 (total production ~7 Mtpa) and trains 3 and 4 (total production ~14 Mtpa) beyond 2015.

• Energy World Corporation proposes to establish a mid-scale LNG plant at Abbott Point producing 0.5 Mtpa of LNG. The proposal includes the development of Energy World’s tenures in the Cooper Basin near Eromanga and the construction/operation of a pipeline linking the fields to Abbott Point. Production is expected to start in 2012. In the second stage production would increase to two Mtpa.

Collectively, should all seven proposals reach full capacity, it would represent a potential LNG export market for Queensland of approximately 43 Mtpa and an approximate consumption of 2580 petajoules (PJ) of CSG per year.

How widely used is LNG?

Globally in 2007, a total of 226.41 billion cubic metres (Bcm) of LNG was transported to 18 countries with Australia supplying a total of 20.24 Bcm of LNG collectively to China, Japan, South Korea and Taiwan.

In the same year, natural gas consumption grew by 3.1 per cent with North America, Africa and the Asia-Pacific recording above-average regional growth. China grew by 19.9 per cent and accounted for the second-largest increase in global gas demand. This rising demand represents a significant LNG export opportunity for Australia.

What are the environmental impacts of the LNG sector?

Natural gas is considered an environmentally-friendly fuel as it has the lowest carbon dioxide emissions per unit of energy of any fossil fuel and can be used in high-efficiency gas turbine power stations. However, the LNG process does have some environmental impacts such as greenhouse emissions and wastewater disposal. These, and other impacts, are currently being assessed.

How is LNG stored?

LNG is generally stored onshore in a double containment tank (a ‘tank within a tank’), with the outer walls often made of concrete and inner walls of high alloy steels composed of 9 per cent nickel. The space between the two tanks is filled with an insulating material. Double containment tanks are designed to ensure the outer tank is capable of holding all of the LNG in place if the inner tank was to fail.

Many tanks are equipped with top-of-tank piping so that in the event of a piping failure, the tank’s contents remain in place.

How is LNG transported to market?

LNG is shipped around the world in specially-constructed cryogenic carriers which maintain its low temperature and thus, its liquid state. LNG carriers use a double-hull design to increase the integrity of the hull system and to provide additional protection for the cargo tanks in case of accident. LNG is not held under pressure.

Most existing LNG carriers transport between 125 000–145 000 m³ of LNG in either four or five cargo tanks. Newer LNG carriers are being designed to carry as much as 215 000 m³ (Q Flex design) or 265 000 m³ (Q Max design). The table below provides an indication of the dimensions of the LNG carriers.

LNG carrier dimensions

It is expected that the LNG plants at Gladstone will be serviced by the smaller existing carriers with the possibly of an irregular visit by Q Flex vessels.

At its destination LNG is delivered to a re-gasification terminal where the LNG is reheated and turned back into gas. Re-gasification terminals are typically connected to a storage and pipeline distribution network to distribute gas to local distribution companies, industry or gas fired power stations.

Contact the LNG projects team

tel:        +61 7 3404 8206
email:    lng.team@dip.qld.gov.au
post :    LNG Industry Unit
Department of Infrastructure and Planning
PO Box 15009, Brisbane City East QLD 4002

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