Opportunities grow with budding LNG industry

WITH three CSG-to-LNG projects currently under construction and another five in the pipeline, Queensland is poised to become a major LNG exporter.
The Queensland Curtis LNG (QCLNG) project, the Australia Pacific LNG (APLNG) development and Gladstone LNG (GLNG) joint venture will produce a combined total of at least 25.3 million tonnes per annum of LNG when exports begin in 2014 and 2015.
Queensland’s emerging LNG industry will be supported by the state’s rich CSG reserves, which comprise 98 per cent of Australia’s proven CSG supplies.
As of June last year, Queensland was reported to have 33,001 petajoules of 2P CSG reserves in areas including the Bowen and Surat Basins, which lie in the east of the state and extend down into northern NSW.
The CSG sector in Queensland has grown rapidly during the last decade, and it will continue to do so under stringent conditions set out in State Government legislation.
CSG has been used to power Queensland houses for more than 15 years and is the state’s major domestic gas source, supplying about 90 per cent of demand.
For the 2010-2011 financial year, the state produced 234PJ of CSG. In 1998-1999, by comparison, it produced just 4PJ.
As global demand for gas increases, Queensland is ready to meet it head on; placing the state on the cusp of an economic boom.
The Queensland Government has stated its belief that gas will be a key transition fuel in a carbon-constrained future economy. Electricity generated from the state’s CSG is reportedly about 50 per cent cleaner than electricity produced from black coal in NSW, and about 70 per cent cleaner than electricity produced from brown coal in Victoria.
Overview of current projects
Operated by QGC (a BG Group company), the QCLNG project involves an expansion of QGC’s existing CSG production in the Surat Basin in southern Queensland; the construction of a 540km pipeline network linking the gas fields from Chinchilla to Gladstone; and a natural gas liquifaction plant on Curtis Island, where the gas will be converted to LNG for export.
Two LNG trains will produce a combined 8.5mtpa of LNG however, subject to demand, the site can accommodate an expansion to 12mtpa.
QGC reported that it expects to begin shipping LNG in 2014 to customers in countries including China, Japan, Singapore and Chile.

The APLNG project has a similar design structure to QCLNG it comprises development of APLNG’s gas fields in the Surat and Bowen basins in southwestern and central Queensland; a pipeline to carry gas from the fields to an LNG facility in Gladstone; and an LNG plant on Curtis Island, with the first two trains having a processing capacity of up to 9mtpa.
APLNG’s joint venture partners Origin Energy (42.5 per cent), ConocoPhillips (42.5 per cent) and China Petrochemical Corporation (Sinopec Group, 15 per cent), plan to export first LNG cargo to energy markets in Asia during 2015.
The GLNG project is a joint venture between Santos (30 per cent) and some of the world’s largest LNG companies: PETRONAS (27.5 per cent), Total (27.5 per cent) and KOGAS (15 per cent). It includes the development of CSG resources in the Bowen and Surat basins in southeast Queensland; the construction of a 420km gas transmission pipeline connecting the gas fields to Gladstone; and two LNG trains with a combined capacity of 7.8mtpa on Curtis Island.
First LNG exports are expected to begin in 2015, at which time the project will supply 11 per cent of Korea’s domestic gas needs and 9 per cent of Malaysia’s.
Economic benefits
Speaking about State Government plans to support economic growth in the Surat Basin, Natural Resources and Mines minister Andrew Cripps said in a statement that the resources sector would play a critical role in reining in Queensland’s $2.8 billion budget deficit and in reducing the state’s unemployment rate to 4 per cent.
“The significant thermal coal and coal seam gas resources in the Surat Basin have the potential to create a significant number of jobs in local communities.
They have already supercharged the economies in towns like Chinchilla, Dalby and Roma,” Mr Cripps said. “Conversion of that CSG into liquified natural gas to export from Gladstone is set to make Queensland one of the  principal suppliers of LNG to the Asia-Pacific region. By 2018, we will be the third largest LNG exporter in the world.”
According to the Queensland Government, the QCLNG, APLNG and GLNG projects are expected to generate a combined total of $45 billion in capital expenditure.
In March 2012, QGC reported that it had spent almost $8 billion since the start of 2010 in developing the QCLNG project and domestic gas business, with about 74 per cent of this figure spent in Australia and 59 per cent of the $8 billion spent in Queensland alone.
Australian companies have been awarded $6.1 billion worth of contracts covering a wide range of goods and services for the project, making the CSG industry a substantial source of employment and income for Queenslanders.
In a statement, QGC managing director Derek Fisher said that about $4.4 billion of the contracted work was being undertaken by Queensland-owned and operated businesses.
“QGC is delivering significant benefits across the QCLNG project area, with more than $1 billion worth of contracts awarded in the Gladstone region and nearly $400 million in the Western Downs region between Toowoomba and Roma,” Mr Fisher said.
Last month, the project’s total workforce was reported to have surpassed 7300 people, with 1594 staff and contractors working directly for QGC and 5719 people engaged by the company’s major contractors.
“We also have a strong commitment to local research and development, with more than $77 million invested to date and 65 per cent of that in Queensland,” Mr Fisher said.
The APLNG project will generate significant benefits at regional, state and national levels, and is expected to boost the Queensland economy by $2 billion each year.
Australia Pacific LNG reported that at peak construction, its project would create about 5000 jobs, with another 1000 positions available during operation.
In June, the company voluntarily provided $5 million to the Gladstone Foundation, a government body that distributes funding for social investment in the region.
“We’re delighted that our contributions today will make a significant difference to the development of social infrastructure in and around Gladstone, and that more of the benefits from the gas industry will flow into the community,” APLNG chief executive Page Maxson said in a a statement.
QGC and the GLNG joint venturehave also made contributions. Meanwhile, in a statement released last year, Santos chief executive and managing director David Knox said that the beginning of construction on Curtis Island heralded an economic boost for Gladstone, Queensland and Australia, representing another significant commercial and strategic link between Australia and Asia.
“Over the life of the project, GLNG will pay around $40 billion in federal income tax,” Mr Knox said.
Former Queensland Premier Anna Bligh said that the GLNG project had already added more than $2 billion to the state’s economy and was set to make a “substantially greater contribution”.
“Over the next 25 years, the project will contribute over $6 billion to state revenue, generate $9 billion a year in exports and see the creation of 6000 jobs,” Ms Bligh said.
At peak production, the CSG projects will create about 18,000 direct jobs, increase state domestic product by 1 per cent, and generate about $1 billion per annum in state revenue.
According to the Queensland Government, royalties from CSG to LNGoperations are projected to increase from about $120 million in 2014 and 2015, to $985 million in 2031 and 2032, and will benefit all Queenslanders by helping to fund vital community infrastructure and services including roads, hospitals and schools.
Skills shortages
The plethora of economic advantages that a growing CSG-LNG industry will provide does, however, cast a shadow. An obvious obstacle that is presented hand-in-hand with a boom in development is securing the workforce required to construct and operate the projects.
Energy Skills Queensland has forecast that the CSG-LNG sector alone will employ 13,500 people during the construction phase of the major projects’ six CSG to LNG trains and a further 6000 people during the operation and maintenance phases once the facilities are fully operational.
In total, the whole energy and resource sector is expected to create 72,000 jobs during the next five years.
Similarly, a study undertaken by Deloitte and the Queensland Resources Council (QRC) found that the state’s resources sector would need another 40,000 workers by 2020.
A number of industry initiatives have already been implemented to help meet the predicted shortfalls.
“The QRC and its members are working with the government, communities, and education and training providers on a number of fronts to ensure that we have the skilled workforce that we require,”
QRC chief executive Michael Roche said in a written interview response. A non-government organisation, QRC is the peak industry body representing the commercial developers of the state’s minerals and energy resources.
Through its network of 32 Queensland Minerals and Energy Academy (QMEA) schools throughout the state, QRC is raising awareness of resources sector-related careers among students by providing school-based apprenticeships, work experience and clear pathways into the industry from school, whether it be at an operator level, as a tradesperson or via university.
QMEA is a partnership between QRC, the State Government, and education and training providers. “QRC and its members also have numerous scholarship programs providing not only financial support but valuable direct contact with the industry through vacation employment and networking opportunities,” Mr Roche said.
“Through QRC’s Women in Resources Action Plan, we aim to increase the proportion of women in the resources sector in ‘non-traditional’ roles to at least 20 per cent by 2020, from the current 11 per cent.”
In addition, Mr Roche said that QRC had just launched its Students for the Future program for 100 selected first-year undergraduates in a range of engineering and science disciplines at universities across Queensland.
The students will undertake a structured engagement and familiarisation program with the industry in the next few months, to inform them about the sector, allowing them to experience sites first hand and encouraging them to consider the career
opportunities that are available through the resources sector – all prior to selecting their second-year study specialisations.

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