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Queensland LNG projects in jeopardy

Origin Energy APLNG

According to the company, low CSG reserves and diversions to the domestic market could cause up to one third of the state’s projects to partially shut down within the next six years.

The consultancy’s latest report detailed how the state’s $84 billion LNG sector would be at risk in the next decade due to considerable doubt that sufficient CSG will be available for the three plants in Gladstone to ever achieve full-scale production.

EnergyQuest said a clearer picture would emerge by 2025, with political pressures to divert gas away from exportation and back to the domestic market exacerbating the issue.

Santos’ Gladstone LNG, Shell’s Queensland Curtis LNG and the Origin Energy-led Australia Pacific LNG make up the three large-scale ventures in the region.

EnergyQuest said the current operating and export capacity of the projects could be as good as it will ever get.

“Unfortunately, there are serious headwinds coming and the outlook is less rosy as the industry over-reached by building three projects of six trains,” said EnergyQuest CEO Dr Graeme Bethune.

“Building six LNG trains in Queensland using CSG was bold and visionary but ultimately a bridge too far.

“We have to recognise that the capacity of the east coast’s CSG resource base to feed multiple LNG trains was largely untried.

“The emerging and critical shortages are resulting from the fact the CSG LNG projects were sanctioned on ambitious estimates of proved and probable (2P) reserves, not proven (1P) reserves that underpin conventional LNG projects.”

EnergyQuest said the plants had operated an average of 82 per cent in 2018.

The report is based on a year-long analysis of corporate and government drilling data from wells, reserves production licences and production data.

For more information visit the EnergyQuest website.

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