FOUR years ago, BG Group sanctioned the Queensland Curtis LNG project with the vision of leading the world’s first project to turn natural gas from coal seams into liquefied natural gas. Now that dream is a mere two months out from reality.
The US$20.4 billion project, to be operated by BG Group’s Australian subsidiary, QGC, will consist of two LNG trains with a combined capacity of 8.5 million tonnes per year.
Future opportunities for expansion also exist, with the construction of a third LNG train covered by state and federal approvals.
The project, which has been under construction since 2010, involves expanding QGC’s existing natural gas production in the Surat basin of southern Queensland; building a 540 kilometre buried natural gas pipeline network linking the gas fields to Gladstone; and construction of a natural gas liquefaction plant on Curtis Island.
Despite encountering a few setbacks, including a 33 per cent cost blowout to the project in 2012 and a spate of strike action in August this year, QGC is standing by its schedule for first LNG in the fourth quarter of 2014, with a ship expected to leave the plant in December.
Train 2 will be commissioned about six months after Train 1.
The project will reach plateau production in 2016, meaning the first year of full production will be 2017.
Finish line in sight
The countdown to QCLNG coming online is now well and truly underway, with a number of critical milestones having been met this year.
Despite these, QGC said important operational activities were still to be delivered before the first shipment of LNG could depart to its end users in December.
Earlier this year, commissioning of the gas turbine generators began and the introduction of natural gas has allowed commissioning of the refrigeration turbines and compressors to start and the flare to be lit.
“These are important steps towards cooling Train 1 and producing LNG,” a QGC spokesman told Oil & Gas Australia.
The LNG plant will comprise two production trains, each with a capacity of 4.25 million tonnes a year.
Gas has been introduced to the plant through Australia’s longest large-diameter onshore pipeline network, which was completed last year.
Facilities on Curtis Island include two LNG tanks, each of which will be able to store 140,000 cubic metres of LNG – or about the same amount of gas needed to fill a ship.
The more advanced tank has been sealed in preparation to receive LNG, the QGC spokesman said.
“The structural integrity of the other tank was successfully tested recently by being filled with seawater, which is denser than LNG. At the same time work is continuing to build Train 2, which will be commissioned in 2015.”
With the downstream component of the project on the cusp of starting, QGC has recruited a highly skilled and qualified team of about 170 people to operate the LNG plant.
QGC said more than half of that team were people from the Gladstone region who have either shifted from other industrial roles or returned to the city after working in the industry overseas.
Meanwhile, the upstream part of the project was progressing nicely with work advancing across the upstream tenements in the Surat basin to ensure sufficient gas supply to the LNG plant.
QGC expects to drill a total of 6,000 wells over more than 450,000 hectares of QCLNG tenements in the next few decades.
At the end of July 2014, QGC had nine drilling rigs operating in the Surat basin.
To date, more than 2,000 wells having been drilled across its coal-rich acreage, and with QGC holding licences in four onshore areas of producing and potential gas supply covering a total of around 33,000 square kilometres, there is a strong case for further trains to be built.
The projects upstream facilities are divided into three main hubs – south, central and north – of 21 processing facilities, each of which will receive gas from about 100 wells.
In the northern hub, drilling and installation of upstream infrastructure at Woleebee Creek, west of Wandoan, is advancing ahead of start-up of train 2 of the LNG plant in 2015.
“The southern hub, west of Dalby, is largely completed, with the Ruby Jo central processing plant and six feeder field compression stations operating since June,” the QGC spokesman said.
“All three field compression stations and the central processing plant in the central hub, near Miles, have achieved ready for start-up status.”
QCLNG gas contracts
QCLNG will mark the first time LNG is exported overseas from Australia’s east coast. China, Japan, Singapore and Chile are major customers of the project, with commitments of nearly ten million tonnes of gas per annum.
BG Group’s contract with the China National Offshore Oil Corporation (CNOOC) is Australia’s largest liquefied natural gas contract between two single companies with BG Group to supply 72 million tonnes of LNG over 20 years from 2014.
The China contract was the first fully termed sales and purchase agreement for LNG from coal seam gas and China’s first purchase of LNG from coal seam gas.
Furthermore, Tokyo Gas is the first Japanese customer from the world’s biggest LNG-consuming nation to commit to buying coal seam LNG.
QGC is also focused on supporting the domestic market, currently supplying about 20% of Queensland’s gas demand.
Jobs, training and the community
While the QCLNG project boasted workforce of about 2,500 Bechtel direct hire staff at its peak, the demobilisation of contractors on the construction phase of the development has been ongoing since 2013.
The LNG proponent has already engaged the workforce required to support the shift to operations, with staff based around hubs in Chinchilla, Brisbane and Curtis Island.
“Having the right people in the right place is our priority but this will be achieved progressively over time as the organisation evolves,” the QGC spokesman said.
The company has remained committed to the training and development of its workforce and surrounding communities over the years, recently investing almost $1 million in cultural and education programs to help young indigenous people in Gladstone and the Western Downs realise their potential.
Once the project successfully reaches full production in 2016, QGC will review training and development requirements including the potential for traineeships and apprenticeships both in the field and at its LNG plant.
QGC has implemented a Social Impact Management Plan (SIMP) to minimise the impacts and maximise the benefits of the QCLNG project. The plan has addressed housing, local employment and economic development, road and marine traffic and community health, safety and social infrastructure.
The SIMP initiative has involved investment in more than 430 projects in the Surat basin and Gladstone. In addition, QGC has committed to sourcing local contractors for the works, with more than 80% of investment since 1 January, 2010 dedicated to Australian businesses.