(EnergyAsia, May 27 2015, Wednesday) — After a delay of about a year, Australia has launched commercial operations at the world’s first plant to convert coalbed methane (CBM) to liquefied natural gas (LNG).


The Queensland Curtis LNG (QCLNG) plant on Curtis Island near Gladstone was officially dedicated on May 15 at a ceremony attended by the state’s Premier, Annastacia Palaszczuk, and Federal Industry and Science Minister, Ian Macfarlane. Equally owned by UK’s BG Group and China National Offshore Oil Corp (CNOOC), QCLNG started up one of its two 8.5-million tonne/year trains last December and has since shipped 16 cargoes while undergoing commissioning and performance testing by builder Bechtel Australia Pty Limited.

The US$20.4 billion project comprises the liquefaction trains that draw natural gas through a 540-km pipeline from the coalbed methane reserves of the onshore Surat Basin in southern Queensland. The second train is due to start up in the third quarter, more than five years after the company began constructing the project.

QGC managing director Mitchell Ingram said the project will produce natural gas for both the domestic market in Queensland as well as for exports.

Apart from being a shareholder, CNOOC is also a foundation customer of the project with a 20-year contract to purchase an annual 3.6 million tonnes of the fuel.

Along with QCLNG, two other major LNG projects in Australia will also face start-up delays.

The US$34 billion Ichthys project in Northern Territory and Chevron’s US$29 billion Wheatstone project in Western Australia are both expected to be delayed by several months.

Japan’s Inpex Corp may have to wait till 2017 to start up its onshore Ichthys terminal due to the delays in the production of a vital offshore platform at South Korea’s Samsung Heavy Industries shipyard.

As a result of cost overruns, delays and recent tight labour conditions, consulting firm Wood Mackenzie has trimmed as much as 11 million tonnes of production from its earlier forecast of Australia’s LNG output for the 2015-19 period.

“The next wave of LNG from Australia will start in 2017 and be exposed to a different economic climate, labour market and changing cost environment than the first tranche of projects,” it said. Australia has attracted a total of US$180 billion worth of LNG investments for start-up in the second half of the decade.