Competition between overseas interests seeking stakes in Australian coal mining projects looks set to be exceeded by a new drive to tap the nation’s coal seam methane reserves.
BG Group’s high-profile A$12.9B takeover attempt for Origin Energy is largely being driven by the latter’s coal seam assets, and four different groups are vying to build an LNG terminal in Gladstone, Queensland, to be fed by the state’s so-far untapped CSG reserves.
BG already has a 10% stake in Queensland Gas Company’s projects in that state, and Malaysia’s Petronas recently bought into South Australia-based Santos’s Queensland CSG-LNG interests through a US$2.5B, 40% stake in a new joint venture. India’s Petronet is looking to make direct investment in exploration in the hope of obtaining 7 mtpa-12 mtpa of LNG to ship back to the sub-continent.
Australia’s east coast is estimated to already have about 30 years of current gas consumption locked away in its extensive coal seams, and much more will be found as exploration intensifies. By some estimates the greater Hunter Valley region and the Gunnedah and Gloucester basins in NSW may hold reserves that could produce exports to rival or exceed Western Australia’s offshore North-West Shelf.
Santos has exploration rights to the Gunnedah Basin and recently announced an 18-month exploration program to verify reserves holding a prospective 40,000 petajoules, or 1.1 trillion cubic metres, of gas - the energy equivalent of about 1.4 bt of black coal. In the Gloucester Basin, joint venture partners Molopo Australia Ltd and AJ Lucas have reported test productions described by analysts as ‘sensational . . . with the world’s best’, above the benchmark figure for commercial gas production of about more than 28,000 cubic metres (or 1 million cubic feet) of gas a day. An export terminal would likely be built at Newcastle.
Sydney Gas Company has two exploration licences that cover the great majority of the Hunter Valley, and QGC also has a major development – including a proposed 750km pipeline from Queensland’s Surat Basin – underway.
