Landmark project nears production

1. Aerial of Santos GLNG's LNG trains

By Emma Brown

June, 4 2015

THE long-anticipated $18.5 billion Gladstone LNG project reached 95 per cent completion in April, with operations predicted to start in the third quarter of this year.

Santos managing director and chief executive David Knox said, despite production starting later than originally planned, the project has progressed well during the past year.

“The announcement highlights our confidence of delivering this transformational project on time and within the US$18.5 billion budget,” Mr Knox said.

“The delivery of GLNG will consolidate our strategic LNG portfolio and further position us as a key player in the growing Asian gas market.”

The pioneering venture will convert natural gas from coal seams in Queensland’s Surat and Bowen basins into LNG at a plant on Curtis Island, producing about 7.8 million tonnes per annum.

It is a joint venture between Santos (30 per cent), PETRONAS (27.5 per cent), Total (27.5 per cent) and KOGAS (15 per cent).

Milestones

Santos GLNG has reached many construction milestones in the past year, including the completion of all major gas field processing facilities and its 420km pipeline between to Curtis Island (including a 4.3km undersea pipeline tunnel).

The joint venture also completed the installation of 111 modules that make up its two LNG processing trains; hydro testing of both LNG storage tanks; construction of its LNG loading jetty; the introduction of first gas to the plant, and the successful firing of the first two gas turbine generators.

“The project has continued to go from strength to strength and we have made significant progress on the ground in both 2014 and in the first quarter of this year,” Mr Knox said.

First gas was fed into Santos GLNG transmission pipeline via its primary compressor station in October 2014, marking an important step towards the shipment of its first LNG from Gladstone Harbour.

“Commissioning of our pipeline is an important milestone, not only for our business, but the Queensland LNG industry as a whole,” Santos vice president downstream GLNG Rod Duke said.

Once in operation the pipeline will transport up to 40 million cubic metres of natural gas each day.  “Construction began in 2012, and since then we’ve worked more than six million hours on this part of our project,” Mr Duke said.

“We’ve welded more than 36,000 segments of 1.05-metre diameter pipe, weighing in excess of 250,000 tonnes in total.

“We’ve also individually negotiated land access agreements with more than 120 landholders, and we’re proud of the strong relationships we’ve built with property owners and local communities over this time.”

Fairview processing hub complete

In November 2014 Santos GLNG’s Fairview gas processing hub became operational.

Santos vice president Queensland Trevor Brown said the significant CSG-to-LNG industry investment now underway would drive the Queensland economy over the long-term.

“This is a great story for Queensland. Santos GLNG is projected to deliver ongoing investment in this state of an average of $1 billion a year from 2016-2020, and an average of half a billion dollars a year after that. This means long-term jobs for Queenslanders over the next 20 to 30 years,” Mr Brown said.

“This adds to the $6.2 billion we’ve invested with Queensland businesses in building our project to this point, and the $200 million invested in roads, hospitals, schools, weed management and events.

“Looking further ahead, our business is expected to contribute billions of dollars in royalties and taxes over many years – that’s money that can be spent on Queensland’s schools, hospitals and roads.

“LNG is without doubt the new shining light of the Australian economy. In just a few short years, LNG will overtake coal and become Australia’s second-largest export behind iron ore – that is a staggering statistic that demonstrates the massive investment underway today.”

First gas into LNG plant

In March, natural gas was fed directly into its two-train facility at the LNG plant. The gas here will be used to fire the first gas turbine generator for high voltage power generation and marked a key step in the plant’s commissioning stage.

“We’ve completed almost all of the construction required for initial production, and LNG plant commissioning is progressing strongly,” Mr Duke said.

Following this, Santos GLNG’s 100m-high flare stack was lit. The environmentally friendly way to release excess gas during the production of LNG is part of the plant’s testing and commissioning process.

The most recent milestone at Santos GLNG was the starting up of the first of six gas turbine generators on Curtis Island; each generator will produce around 12 megawatts of electricity and power all heavy electrical equipment, making them independent from the local Gladstone electricity grid.

Economic benefits

When fully operational the Santos GLNG project will pave the way for Australia to become a world-leading LNG producer and provide billions of dollars to the Queensland economy.

Santos stated the project has provided more than $11.6 billion worth of work to Australian businesses since January 2011, with $6.2 billion spent in Queensland alone.

More than $492 million was spent in the Maranoa, Western Downs and Toowoomba regions and more than $267 million in Gladstone and Rockhampton from January 2011 to December 2013.

Mr Brown said the figures showed just how significant the economic benefits of Santos GLNG were to local, state and national economies.

“Santos GLNG is delivering for the people of Queensland by using local businesses for work including drilling, engineering, equipment fabrication, camps, transport, trades, and environmental services,” Mr Brown said.

“We’re building a new industry for Queensland that will drive the state economy over the long term, which means our contribution won’t stop here.

“As well as creating opportunities for local businesses, we will contribute billions of dollars in taxes and royalties over many years – money that can go to Queensland’s schools, hospitals and roads.”

“We’ve also invested more than $50 million on community infrastructure, organisations and events, including roads, airports, hospitals, schools, the environment and the arts.”