Santos to build $7b LNG plant in Qld

July 18, 2007 - 10:59AM
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Energy play Santos Ltd has unveiled plans to build a liquefied natural gas (LNG) plant at Gladstone in Queensland, at a cost of up to $7 billion.
Queensland houses the majority of Australia's coal seam gas resources and a gas supply of 170 to 220 petajoules a year will be sourced from Santos' coal seam gas fields in the state.
"Conceptual engineering and preliminary financial analysis have confirmed that Gladstone LNG will generate acceptable rates of return for shareholders, whilst at the same time providing significant benefits for Queensland in terms of employment and royalties," managing director John Ellice-Flint said.
The proposed LNG facility will use coal seam gas and sell into export markets, with a single processing train of around three to four million tonnes a year.
Half of the investment will be used to build the Gladstone plant, with the rest to be ploughed into Queensland's Bowen and Surat Basins in the east of the state, where Santos holds a number of permits.
Queensland Premier Peter Beattie has awarded the plans significant project status.
Santos must now appoint an engineering contractor to undertake studies, accelerate its exploration and appraisal drilling program to shore up coal seam gas reserves, complete planning and environmental studies and start LNG marketing.
"Santos' coal seam gas reserves and contingent resources currently total over 5,000 petajoules, with significant upside potential," Mr Ellice-Flint said.
"Constructing and operating major onshore gas installations is a core competency for Santos, and we are already involved in the LNG industry by virtue of our interests in Darwin LNG, the most recent greenfield LNG project constructed in Australia."
A final investment decision is expected by the end of 2009, to enable the export of first cargoes in early 2014.
In 2007 Santos will spend around $150 million expanding its coal seam bas business, and subject to the necessary approvals also plans to shell out $200 million in 2008 to progress the Gladstone project.
In February Santos backed away from its $910 million pursuit of smaller rival coal seam gas producer Queensland Gas Company, after Australia's corporate watchdog announced it would oppose the takeover.
At 1321 AEST Wednesday, Santos shares were nine cents higher at $14.09.
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