Energy giant invests in liquid future

QUEENSLAND is known to have one of the richest sources of onshore CSG reserves in Australia, particularly within the Bowen and Surat basins.
The GLNG (Gladstone LNG) project in South East Queensland will use world-first technology to process CSG into LNG and is expected to produce its first exports in 2015.
Santos GLNG will convert CSG from the Bowen and Surat basins to LNG, and will involve the construction and connection of a 420km gas transmission pipeline from the gas fields to a 7.8 million tonnes per annum two-train processing facility on Curtis Island and two LNG storage tanks in Gladstone, which are currently under construction. A gas treatment facility will be built in Wallumbilla, pending environmental and state approvals to separate hydrocarbons from the gas before transfer to Gladstone.
Estimated to cost US$16 billion, the project will create 5000 jobs during construction and 1000 jobs during operation, and will promote Queensland’s LNG export industry to the
third-largest in the world.
The GLNG project is being operated as a joint venture (JV), with operator Santos GLNG having a 30 per cent share. Fortune 500 Malaysian oil and gas company PETRONAS holds a 27.5 per cent interest, French energy company Total has a 27.5 per cent interest and Korea Gas (Kogas) holds the remaining 15 per cent share. When first production takes place in 2015, PETRONAS and Kogas will receive a delivery of 3.5mtpa each for a term of 20 years as per the binding sales agreements signed by all parties.
Santos was founded in 1954. Its first natural gas discovery, the Gidgealpa 2 well, was made in the Cooper Basin in 1963. Three years later, the company discovered another well in South Australia: heralding the start of Santos’s role as a major player in the Australian resources industry.
The fields
The JV partners are targeting several fields for the CSG to LNG conversion: Fairview, Arcadia Valley, Roma and Scotia. According to Total’s website, the fields have a combined resource estimate of more than 9 trillion cubic feet of gas. The Fairview field already produces 110 million cubic feet of gas per day for the local market.
As well as being a source for CSG, the project will also recycle and treat the water used in the CSG extraction process with reverse osmosis plants under construction, one at Roma, one at Fairview and one at Arcadia Valley, and two associated water amendment facilities in Fairview. The plants will use the treated water to supply agricultural communities within the
surrounding areas.
The process
The CSG will be extracted through a process of hydraulic fracturing (or fraccing), whereby high-pressure water and sand are pumped into the wells to help release the CSG from the
rock. The water and gas travel from the fields through pipelines to the processing plant, where the gas is processed and the water is pumped to a reverse osmosis treatment plant to be recycled. According to the CSIRO website, water and sand make up to 97 to 99 per cent of the fraccing products used in the mining process, with only 1 to 3 per cent of the liquids being chemicals, making the fraccing process a reduced emission, less invasive and lower impact form of extracting CSG on the environment, and land rehabilitation easier.
Wallumbilla gas treatment facility The Wallumbilla gas treatment facility will be built to extract hydrocarbons from the gas before transfer to Gladstone and will be built pending a prepared environmental impact statement (EIS) and environmental approvals from the Queensland State Government. It will take approximately two and a half years to build, and will create an estimated 300 jobs during construction. The site is 50km from Roma and 12km south ofWallumbilla, in Queensland’s South West and will have two gas processing trains, gas
compression facilities to transfer the liquid through the pipeline at pressure, storage tanks for hydrocarbons, a plant control room and facilities and a plant power supply.

Global growth
While CSG to LNG production represents a new boom industry for Queensland’s mineral sector, it is expected that within 10 years, the CSG to LNG industry in Queensland will become the major supplier of LNG to the Asia-Pacific region. It will generate investment of more than $50 billion while creating employment opportunities for local communities.
“It has been forecast that global LNG demand for 2025 will be about 425 million tonnes per annum, and Australia is expected to supply about 35 per cent of this (147mtpa) by 2018, with [the] potential for 25mtpa of LNG production from Gladstone,” Santos GLNG president Mark Macfarlane said. “Queensland will rank third in theworld in LNG production after Qatar and PETRONAS’s Malaysian LNG, exceeding even Nigeria LNG and Algeria LNG. This supply growth will meet the increasing demand from China and Southeast Asia, as
well as from the traditional markets of Japan, Taiwan and Korea,” Mr Macfarlane said. LNG project update As part of the Santos Social Impact Management Plan (SIMP), collated over
three years and based on more than 2000 discussions held with community, local and state government members, Santos GLNG will invest $200 million into local communities surrounding the LNG project, including Maranoa, Western Downs, Banana and Gladstone.
In an April media release, Santos GLNG indicated that the key areas the SIMP would focus on included: water and the environment; community safety; social infrastructure and roads; local business and skills development; Aboriginal engagement; and community well being and liveability.
“We are planning to invest significantly in the upgrade and maintenance of state and local roads, build social and affordable housing for the communities of Gladstone and Roma, and invest in beneficial uses of treated water from our coal seams and in environmental offsets,” Mr Macfarlane said.
There are currently 400 people working in the gas fields, where the detailed engineering is 80 per cent completed and Santos has begun site clearing and road upgrades.
According to Santos’s GLNG website, work has also started on the building of a temporary 700-person accommodation camp in Arcadia Valley for the pipeline construction team.
Pipeline/facility and housing progress In an address to stakeholders and investors at the Santos 2012 annual general meeting, Santos chief executive officer David Knox said that construction of the LNG project was proceeding to plan, with mobilisation to site having already begun. He said the engineering and procurement of the 420km underground gas transmission pipeline was complete and that the laying of pipes would begin later in the year.
“Following final investment decision in January last year, construction of GLNG is progressing well and first LNG is expected in 2015,” Mr Knox stated.
According to the Santos GLNG website, the Curtis Island LNG plant and accommodation facilities are also progressing to schedule.
There are currently more than 155 people living in the workers’ accommodation facility on Curtis Island. There is also a Gladstone housing project, which is a JV between Santos GLNG, Australia Pacific LNG and QGC Queensland Curtis LNG designed to fast-track affordable housing for employees on the Gladstone project while alleviating stress on the Gladstone region’s housing and rental markets. A not-for-profit organisation called Gladstone Affordable Housing (GAH) was created to minimise any impact of the GLNG project on the greater community. The program will see affordable housing made available for renting and purchase, with all profits reinvested into the program in order to benefit the community.
“Santos GLNG has already implemented a number of initiatives detailed in the plan and invested more than $31 million into social infrastructure in the Maranoa and Gladstone regions, including more than $13 million towards social and affordable housing support,” Mr Macfarlane said. In an April media release, he stated that the funding had contributed to the development of the new Roma airport, an upgrade of hospital facilities and services in Gladstone and Roma, the establishment of a new aero-medical evacuation service in the
Surat Basin, and housing support and new infrastructure.
Incentives for the local community According to the Queensland Government website, the CSG to LNG industry will create at least 18,000 jobs, with many more flowing from the wider resources boom occurring in Queensland.
In a proactive approach to acting now for the future, the State Government has partnered with the Department of Education and Training and Skills Queensland to develop apprenticeships and training programs. To further encourage the CSG to LNG industry, the Queensland Government has: delivered a $10 million program to train thousands of workers; expanded the Queensland Minerals and Energy Academy; provided a CSG-based program to more than 4350 students in the Surat Basin; and invested nearly $24 million
to manage growth in the Surat Basin, with $4.5 million of that funding dedicated to a trade training hub that will give students high-quality CSG production skills.
As part of further initiatives to employ skilled locals, Santos GLNG launched a specialised CSG to LNG TAFE training centre in alliance with SkillsTech Australia in 2011. It will be used to educate tradespeople, and arm them with the skills and knowledge to transition into the CSG to LNG industry by providing classroom and practical on-the-job experience.
“Trainees for our 420km underground gas transmission pipeline will travel to Malaysia to gain on-the-job training with our project partner PETRONAS,” Mr Macfarlane said.
The benefits to Gladstone from the CSG to LNG industry will increase the opportunities for Queensland, with more employment, skills and training available to the community surrounding the industry. “Queensland’s LNG industry is on the cusp of a boom that will fundamentally reshape our economy. How we manage that boom and the environmental, social and economic impacts will be crucial for generations to come,” Queensland State Development, Infrastructure and Planning minister Jeff Seeney stated.

 

 

 

 

 

 

By Zana Kaic

One Response to Energy giant invests in liquid future

  1. Adiles

    July 20, 2012 at 12:58 pm

    i love reading through your blog, thank you for sharing with us.

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