Santos, partners sanction $16B GLNG project in Australia

By Phaedra Friend Troy

Australian energy firm Santos, along with partners Total (NYSE:TOT), Petronas and Kogas, sanctioned the $16 billion Gladstone LNG project in Australia. Project partners have formally made the final investment decision, approving the 7.8 mtpa GLNG development in Queensland.

The GLNG project involves the development of coal seam gas (CSG) resources from the Fairview, Arcadia, Roma and Scotia fields located in the Bowen and Surat Basins in southeast Queensland. These fields are estimated to contain more than 250 billion cubic meters of gas.

The development will include the installation of a 420-kilometer gas transmission pipeline from the gas fields to Gladstone, as well as the construction of two LNG trains with a combined capacity of 7.8 mtpa on Curtis Island.

This decision prompts the award of major projects, including upstream field development, pipeline and LNG facility construction. Orders will now be placed for long lead time equipment, such as line pipe, compressors and LNG plant machinery.

First LNG exports are scheduled for 2015, and plateau production is expected to be reached in 2016 for more than 20 years. Importantly, the project already holds binding sales agreements with Petronas and Kogas for 7 mtpa in aggregate.

‘A Tremendous Boost’

Queensland is currently mired in floods that are forcing residents out of their homes and stalling the state’s workforce.

“Proceeding now with projects like this will be a tremendous boost to the Queensland economy as we recover from the devastating impact of the floods,” said Queensland Premier Anna Bligh.

In 2011 alone, the GLNG project is expected to create 1,500 jobs. During the entire construction phase, the GLNG project will create 5,000 jobs, and the project will create 1,000 permanent jobs once production commences.

“This project and economic development more generally is important in underpinning the skills, tax revenue, weather and capacity to respond and rebuild in the aftermath of the current flood crisis in Queensland,” added Federal Minister for Resources and Energy Martin Ferguson.

Santos serves as the operator of the Gladstone LNG project with 30 percent interest. Project partners include Total with 27.5 percent, Petronas with 27.5 percent and Kogas with 15 percent.

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