Eastern Star Gas Announces Newcastle LNG Project Update (Australia)

Eastern Star Gas Limited is pleased to confirm that arrangements for purchase of the 24 hectare parcel of land on Kooragang Island, Newcastle, became unconditional on 14 January 2011. Purchase of the site, which will house ESG’s LNG Newcastle Project, will be completed in late February 2011 upon payment of the final balance of $22.5m.

In announcing finalisation of the land purchase arrangement Mr David Casey, Managing Director of Eastern Star Gas, commented that “completion of the land purchase reflects the Company’s confidence in the LNG Newcastle Project with a number of important milestones now realised”.

“The investigation into the feasibility of developing an electric motor driven, mid-scale LNG Project on the Kooragang site, funded by our partners Hitachi Limited and Toyo Engineering Corporation, was completed at the end of last year with favourable outcomes. Forecast project costs are well and truly competitive with industry best practice, while the size and operational flexibility of the project are ideally suited for supply from an upstream coal seam gas project. We expect to announce commencement of front end engineering and design work within the next few weeks”.

“Approvals processes are underway. A Preliminary Environmental Assessment for the LNG Newcastle Project should be submitted to the Department of Planning within days”.

“And we are absolutely delighted by the support we are receiving from the business community of Newcastle. Eastern Star Gas is working with relevant authorities on matters ranging from water and high voltage electricity supply through to identification of potential LNG loading berth locations. Eastern Star Gas is confident the ongoing assistance and input of these key stakeholders will help to ensure the proposed LNG plant achieves the highest standards of safety, environment and efficiency”.

Over coming months all aspects of the LNG Newcastle Project will be advanced, as will upstream gas pipeline and gas production activities. ESG is progressing field work at Narrabri, a key aim of which is to achieve further upgrades of certified gas reserves. Although the Narrabri CSG Project has escaped the severe flood related problems seen in Queensland, recurring wet weather in the Narrabri region continues to delay activities including corehole drilling and commissioning of the Tintsfield production pilot. While this is very likely to result in further delay to the next round of gas reserves upgrades, it will not impact overall marketing or project development activities, all of which remain on track.

Mr Casey concluded “development of the Narrabri CSG Project and the LNG Newcastle Project will not only deliver economic benefits to NSW through job creation and capital investment, it will also see the state achieve self-sufficiency and security of gas supply”.

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Source: Eastern Star Gas, January 17, 2010;