| PERTH, Sept 29
PERTH, Sept 29 Shareholders of coal seam gas
projects in Australia's Queensland state worth at least A$60
billion ($58.08 billion) are due to make final investment
decisions before the end of 2010.
The projects also need environmental approval from the
newly formed minority government. Environment minister Tony
Burke has said he intended to stick to his predecessor's
timeline of Oct. 11 for approving the projects. [ID:nSGE68Q005]
Federal approval for the projects was already delayed by
three months earlier this year, with Burke's predessor saying
the government needed more time to study the impact of the
Following are questions and answers on the approval
WHAT DO INVESTORS THINK OF THEIR CHANCES OF GETTING
Although analysts flagged political uncertainty as a
problem that could delay projects, Total (TOTF.PA) went ahead
with a A$750 million investment in the Santos project just two
days after the new Labor government was formed. [ID:nSGE688011]
Total's decision indicated investors saw little real risk
to the projects from the new government, despite the potential
for the Greens party to lobby for stricter regulations.
WILL GOVERNMENT APPROVALS BE CONDITIONAL?
Although most industry watchers expect projects to get
approval on Oct. 11, the government is likely to set some
conditions including additional research on and monitoring of
coal seam gas extraction impact on water supplies.
"The environmental issues are substantial and I see a
repeat of the Gorgon situation whereby projects will get
approved under very strict guidelines," said State One
Stockbroking research analyst Peter Kopetz, referring to
Chevron's Gorgon project off the coast of Western Australia.
The projects were unlikely to face highly capital intensive
requirements, other analysts said.
Due to the size of the projects and the amount of state and
federal revenue they are expected to generate, Burke is likely
to be under pressure to allow the projects to go ahead.
"The taxes from these project are significant," said Di
Brookman, an analyst with CLSA Asia-Pacific.
IS THE INDUSTRY SET TO FACE MORE STRINGENT REGULATIONS?
Some in the LNG industry have suggested that the minority
government may be more likely to push for more stringent
environmental rules as a concession to the Greens party, which
was key in propelling Prime Minister Gillard to power.
Gillard has promised to explore ways to put a price on
carbon emissions, but any scheme would not be in place before
2012 and is not seen as a factor that would delay coal seam gas
While the Greens have raised concerns about water
contamination and increased greenhouse gases, the natural gas
produced from coal seam gas projects is a cleaner burning fuel
than coal, one of Australia's top exports.
Natural gas is also seen as a transitional fuel in
Australia and much of the world in introducing a carbon trading
scheme, which the Greens support, and moving toward a lower
carbon economy and footprint.
WHICH COMPANIES ARE WAITING?
The projects waiting for approval are:
--Gladstone LNG, owned by Santos (STO.AX), Petronas
[PETR.UL] and Total (TOTF.PA).
--Queensland Curtis Island LNG, 93.75 percent owned by
Britain's BG Group BG.L
--Australia Pacific LNG, owned jointly by Origin Energy
(ORG.AX) and ConocoPhillips (COP.N).
The Santos and BG project approvals were pushed back from
July to Oct. 11 by the previous environment minister Peter
Garrett. Origin has said it expects to get federal
environmental approval for its project in the fourth quarter of
WHAT ARE THE ENVIRONMENTAL CONCERNS?
Environmentalists say coal seam gas projects in Queensland
will adversely affect the water supply from the Great Artesian
Basin used for agriculture, including crop irrigation, as well
as being channeled to Australia's Great Barrier Reef.
The tainting or reduction of the water supply in the Surat
Basin, where several of the coal seam gas projects will be
based, may also adversely impact the Darling Downs, one of the
country's major farming regions, according to project
COULD ENVIRONMENTAL CONCERNS DELAY PROJECTS?
Opponents of coal seam gas say the companies have not yet
adequately addressed how to protect water supplies in the
"I think they are nowhere near where they need to be for
approval," said Drew Hutton, a spokesman for Friends of the
Earth, who said the group would consider legal means to halt
the project if necessary.
But so far, there is no precedent for delaying such
projects after federal authorities have given approval,
Australian mineral rights are owned by the state and thus
landowners have little recourse to block mining and drilling.
Most recently, West Australian Premier Colin Barnett
forcibly acquired land for Woodside's Browse gas project after
talks on an indigenous land use agreement with the Kimberley
Land Council broke down.
(Editing by Ed Davies)