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$100m LNG supply contract for heavy transport

BOC and QGC announce $100m gas supply agreement that puts them on track to complete interstate network of LNG refuelling stations for truckers

March 18, 2010

BOC and QGC today announced a long-term gas supply agreement worth more than $100 million that puts the companies on track to complete an interstate network of LNG refuelling stations for the trucking industry.

BOC, a member of The Linde Group, and QGC, a BG Group business, announced the contract at a function in Chinchilla, southern Queensland, attended by Queensland Premier Anna Bligh.

As part of the agreement, QGC will supply BOC with up to 30 petajoules of coal seam gas over 15 years.

QGC will supply gas to BOC from July 2011, putting the companies on track to become the first in Australia to produce LNG from coal seam gas, through safe and proven liquefaction technology.

To process the gas into LNG, BOC will build a micro-LNG plant similar to the one that BOC is now constructing in Westbury, Tasmania. The plant, planned to be built near QGC’s gas fields in the Surat Basin, will produce 50 tonnes of LNG a day – equivalent to 70,000 litres of diesel – for heavy transport and industry.

“This agreement heralds the extension of a new industry to Queensland based on coal seam gas where heavy transport may switch to LNG, an environmentally cleaner fuel than current alternatives,” Bligh says.

“LNG produces up to 20 percent less emissions than diesel when used for transport and is a quieter, proven, safe alternative to other fossil fuels.

“Through this agreement, Queensland will join with other states as BOC develops an innovative network of LNG refuelling stations along the east coast of Australia for vehicles converted to run on LNG.”

LNG is methane – a natural gas – which when cooled to about -1,620 degrees celsius becomes liquefied, taking up 600 times less volume than as a gas. It can then easily be stored in tanks at low pressure and be used as a fuel for heavy transport.

Natural gas is one of the safest transportation fuels and offers a number of critical environmental advantages when compared to competing hydrocarbon fuels, including significantly lower carbon dioxide and other greenhouse gas emissions and cleaner air quality.

BOC plans to complete an interstate network of LNG refuelling stations for the trucking industry, building and operating up to eight refuelling stations from Queensland to Victoria.

As a starting point in Queensland, BOC proposes to build a refuelling station on the Warrego Highway, subject to further discussions with its customers.

These stations will be supplied from BOC’s existing liquefaction plant in Victoria and the one to be built in the Surat Basin.

The Victorian plant and another under construction in Tasmania are based on the use of conventional gas.

The company is seeking to begin construction of the new plant next to QGC’s Condamine power station, near Miles, subject to a formal development approval process, early next year.

QGC plans to assist in the supply of land and utilities. BOC expects to spend at least $100 million – exclusive of gas – on construction and operation during the lifetime of the project.

Up to 40 people will be employed during the construction phase and two full-time employees will be based at the plant on completion.

QGC Managing Director Catherine Tanna says the agreement offers great economic and environmental benefits to Queensland.

“This is a leading-edge partnership in which QGC and BOC will use the natural resources of the region’s coal seam gas to extend an attractive new industry to Queensland,” she says.

“By supplying coal seam gas to be converted into LNG to replace diesel, we’ll be helping to create a new industry and at the same time support local economies.

“QGC is committed to supplying the domestic gas market from our gas fields in southern Queensland as we continue to develop our Queensland Curtis LNG Project at Gladstone.”

BOC South Pacific Managing Director Colin Isaac says the agreement marks an important step in the development of LNG, an innovative new fuel, for the transport industry.

“Using coal seam gas to create LNG as a transport fuel is an Australian first,” he says.

“When construction is complete, this plant will supply a cleaner fuel than diesel with a more stable price. That’s a big win for trucking operators, for the environment and the local economy.

“LNG is a reliable and proven technology that will offer Queensland’s trucking operators an economically and environmentally appealing alternative to diesel.

“Importantly, natural gas is a well-accepted fuel, with 10 million vehicles worldwide fuelled by natural gas. In Australia, buses operate in Sydney, Brisbane, Adelaide, Perth and Canberra on this fuel. Safety is of paramount concern to both BOC and QGC.”

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