Shell-Arrow Queensland project to tap coal seam gas for export

According to Shell, its Queensland liquefied natural gas facility which it plans to be big enough to ship up to 16 mm tpy of gas every year, could be as large as those proposed by its rivals. The company said this in a document it lodged with the state government of Queensland.
The Shell Australia LNG venture on Curtis Island will come up near the city of Gladstone the document says. The company will undertake an environmental impact report for the project.

The project would be the fifth venture to tap gas extracted from coal seams in central Queensland for conversion to liquid form and subsequent export to Asia. Output is expected to commence in 2014 or 2015, according to the document. The company proposes building as many as four trains, or production units, at Curtis Island, it said in an Initial Advice Statement, to the state government.
The project will use coal-seam gas from fields it jointly owns with Arrow Energy. Shell signed an agreement in June to pay $ 700 mm for a 30 % stakein Arrow's coal seam gas acreage in Queensland and a 10 % interest in Arrow's international unit.

Coal-seam gas is mostly methane found on the surface of coal which can be extracted when pressure on the seams is reduced. LNG is natural gas which is chilled and then transported on ships to destinations not connected by pipeline. The size of the plan is on par with the project proposed by Origin and ConocoPhillips, which was until now the biggest of four rival projects in the region. However size apart, it is the projects led by Britain's BG Group and Santos that score over Shell and ConocoPhillips projects in organising the necessary government approvals as also buyers.
In May, BG signed an agreement with China National Oil Corporation for supply of gas to the company for 20 years while Santos is engaging with potential Korean customers sell LNG and a possible equity stake in its project to boot.

The emerging coal seam gas sector in Australia has only seen a limited presence of Shell as compared withsome of its global oil peers that have been quick to sign multibillion-dollar deals. These players have laid out around $ 22 bn for the development of the sector and are gearing up to meet Asian's growing energy demands.
Shell had last year made an offer for a 30 % stake in Arrow Energy's domestic coal operations that according to analysts was relatively small for a company the size of Shell.