It’s a blast as gas helps feed bottom line

WITH the gas set to flow this year from Queensland’s giant new CSG-to-LNG refineries, the state can at last book a bottom line benefit.

Gladstone Gas

WITH the gas set to flow this year from Queensland’s giant new CSG-to-LNG refineries, the state can at last book a bottom line benefit after years of angst and controversy over the sunrise industry.

Derided by its critics as environmental vandalism, royalties from liquefied coal-seam gas production in 2014-15 will lift the state government’s take from the petroleum sector from $68 million to $199m. Forecast royalties swell to $561m in 2014-15 and $660m in 2016-17 before easing to $636m in the final year covered by the ­budget.

Queensland Treasurer Tim Nicholls is counting on coal-seam-sourced liquefied natural gas to do its share of the “heavy lifting’’ and keep the budget in the black if, as predicted, it returns to surplus in 2015-16.

That will be on the back of economic growth doubling to 6 per cent and then settling at a ­nation-leading 4 per cent a year over the budget forward estimates.

“The ramp up in LNG production is forecast to lead to a surge in overseas exports of 22.5 per cent in 2015-16 which, combined with improvement in the domestic sector, is forecast to boost economic growth to an 11-year high of 6 per cent in that year,’’ the budget papers say.

A 12,000-strong workforce managed by contractor Bechtel Oil and Gas is toiling to ready the three huge refineries on Curtis Island, off Gladstone, to meet a deadline for shipments to commence in the December quarter of this year.

Completion of the plants will mark the end of the new industry’s $60 billion construction phase, and the shift to production. First out of the blocks is the BG Group’s Queensland Curtis LNG Project, with commitments from buyers in China, Japan, Singapore and Chile for nearly 10 million ­tonnes of LNG a year from October.

The Australia Pacific LNG project, a joint venture between Origin Energy, US multinational ConocoPhillips and China’s Sinopec is 70 per cent complete and on track to ship gas from mid-2015; Santos GLNG, backed by the South Australian-based energy producer Malaysian giant Petronas, plus Total and Kogas, is 80 per cent finished, also due on line next year.

Anti-CSG campaigner Drew Hutton said the pollution and health risks to water catchments, farm land and rural communities outweighed the “few hundred million dollars’’ the industry would pump into the state coffers.

“Future generations will condemn them,’’ said the Lock the Gate Alliance president.

The budget papers reinforce Queensland’s heavy reliance on its traditional “black gold’’ — thermal and coking coal. Banking on a rebound in the sagging coal price, royalties are forecast to surge from $2.07bn in 2014-15 to $3.31bn in 2017-18.

It is one of the biggest assumptions in the budget given the notorious volatility of commodity prices: Mr Nicholls and his boss, Campbell Newman, will be sweating on it paying off, just as the ­gamble to develop the CSG industry did.