Exciting Times for the Queensland Gas Industry

The world’s first coal bed methane (CBM), or coal seam gas (CSG) as it is called in Australia, is the gas source for an LNG facility started-up in late December 2014. The BG Group affiliate, QGC, began loading the first cargo of LNG from its Queensland Curtis LNG (QCLNG) facility to the vessel Methane Rita Andrea on December 28th.

Queensland Curtis LNG, LNG, oil and gas, Australia, coal bed methane, CBM, coal seam gas, CSG, QGC
Methane Andrea about to load (Courtesy QGC)

This project is a complex Joint Venture between QGC, the majority owner and operator, and CNOOC, the Chinese national company, with Tokyo Gas also holding a relatively small interest.The second train should start up in 2015 and the project is expected to reach its plateau rate of 8.6 million metric tonnes p.a (“million mta”) in 2016.

The other two LNG projects on Curtis Island will also start up during 2015:

  • Queensland Curtis LNG, LNG, oil and gas, Australia, coal bed methane, CBM, coal seam gas, CSG, QGCGladstone LNG (GLNG) operated by SANTOS, with PETRONAS, Total and KOGAS as joint venture partners, with a 2 train capacity of 7.8 million mta.
  • Australia Pacific LNG (APLNG), jointly operated by Origin Energy and ConocoPhillips, with Sinopec as the third partner, with a 2 train capacity of 9 million mta

All three projects will use the same liquefaction processes, with construction being managed by Bechtel.

Most of the other major CSG Operators in Queensland, including Arrow Energy (the Shell-Petro-China Joint Venture) and the Landbridge (Westside Energy) Mitsui joint venture are still in the Commercial Demonstration Phase, supplying gas or electricity into the domestic grid; or running Pilot Projects to test new areas and/or extraction techniques.

The majority of the gas dedicated to these projects will be drawn from the Permian and Jurassic coals in the Bowen and Surat Basins of Central South Queensland. The Queensland and Australian government agencies have pegged the Economically Demonstrated Coal Seam Gas (CSG) Resource endowment of these basins at more than 30 TCF. There are also vast quantities of Prospective Unconventional Gas Resources in Queensland; not only in the tighter and thinner coals and in the more remote basins, but also in the deep (>3000m) basin centered, tight sands and carbonaceous shale gas plays that are the current focus of active exploration activities.

As in Wyoming, there were mature, conventional oil and gas fields and active coal mining activities before CBM/CSG development activities started in Queensland in 1996. Production had steadily ramped-up to around 250 MMscf/d from ±1300 active wells in 2012-13. However, the resource base was so vast that it had become apparent to all stakeholders that a much larger market was needed to support ongoing development.

Queensland Curtis LNG, LNG, oil and gas, Australia, coal bed methane, CBM, coal seam gas, CSG, QGC
Main QCLNG pipeline in the ground (Courtesy QGC)

Three major, ±500km, overland, gas trunk lines have now been built to link the major CSG development areas in Central South Queensland to the LNG plants being built on Curtis Island in the port of Gladstone, near to the southern end of the Great Barrier Reef.

A further 2700 shallow (500-1000m) development wells have now been drilled and are being ramped up and tied-into the gathering systems for dewatering. There will be ongoing development programs for many years to come, with some predicting that the ultimate CSG well count will reach 30-40,000.

Queensland Curtis LNG, LNG, oil and gas, Australia, coal bed methane, CBM, coal seam gas, CSG, QGCIt should not surprise anyone that this emerging Australian industry has made incredible, revolutionary strides in the treatment of brackish CSG water for beneficial use by farmers and local communities. Moreover, since these developments are taking place in the catchment area of the Great Artesian Basin (GAB), unprecedented care is being taken with monitoring and managing any potential impacts on adjacent aquifers.

All this has been achieved in the face of stiff, well organized and vocal opposition from a minority of activists, who are opposed to multi-national trade and/or ongoing oil, gas and coal development activities.

The CSG industry focus will now swing from being schedule driven to the achievement of continual improvements in operating and life-of-project financial efficiency, while maintaining system high reliability and strengthening stakeholder relationships and Social License to Operate.

Significant technology transfer, adaptation and development challenges remain in addition to the ongoing requirement for evolutionary competency development programs. These programs must match the needs of these somewhat unique projects, as well as the career development aspirations of a broad spectrum of Oil and Gas professionals living in Queensland. As discussed by others in earlier blog posts, this is by no means a simple task. The facilitators constantly find themselves at the edge of their experience and comfort zone with “Millennial” participants, who have already faced challenges in the field that are outside the envelope of industry norms. This calls for the type of revolutionary approach to mentoring and competency development at which IHRDC excels.

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