QLD LNG output set to soar

Queensland is expected to produce more liquefied natural gas by 2020 than Australia's total current output, energy economics firm EnergyQuest says.

Queensland LNG capacity is set to reach at least 25 million tonnes (Mt) within nine years, according to the South Australian company's annual review of the industry.

Australia produced 20.8 Mt of LNG in the 12 months to June 30.

EnergyQuest chief executive Graeme Bethune said Asian demand for Queensland LNG extracted from coal seam gas (CSG) had been outstanding, considering CSG-to-LNG had never been done before.

However, labour shortages were likely to be a major constraint on projects meeting their timetables, EnergyQuest said.

"Shortages are only beginning to emerge but are expected to intensify in 2012, particularly for project sub-contractors," it said in a statement.

Tens of billions of dollars worth of these developments are currently underway in the state.

One of Queensland's biggest CSG-to-LNG projects, Origin Energy and ConocoPhilips' $35 billion Australia Pacific LNG joint venture on Curtis Island off Gladstone, last month got the final investment decision to go ahead.

And today the now Royal Dutch Shell and PetroChina-owned Arrow Energy awarded a contract to an international consortium for front-end engineering design of a LNG plant that may have up to four processing "trains" on Curtis Island that could produce 16 Mt a year.

EnergyQuest also said further expansion of Queensland's LNG capacity to about 32 Mt appeared feasible by the mid 2020s, subject to continued Asian demand and the delineation of sufficient gas reserves.

New projects and expansions of existing developments in Western Australia and the Northern Territory, however, are expected to increase the national production of LNG significantly over the next ten years.

Currently WA and NT projects account for 19.9 Mt of LNG production each year.

The Pluto and Gorgon LNG projects, currently under construction will add another 4.3 Mt and 15 Mt, respectively, once they are commissioned.

And planned projects Prelude, Wheatstone and Icthys are expected to boost production by a combined 20.9 Mtpa

Separately on Tuesday, WA Premier Colin Barnett said Australia should establish a LNG receival point on the East Coast so that the country could use more of the energy it produces, rather than exporting it.

He suggested somewhere like Gippsland in Victoria, "so that gas can be transported in liquid form around Australia."

"Why wouldn't we make a simple policy decision as a country and use some of Australia's natural gas for power generation and distribution here, and do what Japan, Korea, China and India are quite deliberately doing," Mr Barnett told ABC Radio.

Mr Barnett's comments come amid a storm of controversy surrounding CSG exploration in Queensland and NSW about its impact on agriculture.

The Queensland government announced yesterday that it would prohibit exploration in urban centres, but the NSW government today rebuffed a Greens call for Premier Barry O'Farrell to follow Queensland's lead.