Coal gas LNG cynicism? Bah, humbug!

"LIKE Slugcatcher, I too have been around long enough to be familiar with all the pipedreams he listed and have more than passing familiarity with some of them. However I think the Slug on this occasion is being overly pessimistic," writes PNN reader Tony Norris.

The money men he is talking about seem to be the brokers and spruikers (always an optimistic lot!). The people who actually provide the money are a different mob entirely.

Even six or seven years ago you could not bank a coal seam methane contract. When I say that, I mean you could not get project finance for a project (eg a CCGT) fuelled by CSM.

This was because the bankers were not convinced that CSM was viable and there was not enough experience to convince them otherwise. The solution then was to have the gas supply agreement provided by a Santos or similar who had conventional natural gas to back up and/or mix with CSM. Today (a relatively short time later in the scheme of things) I believe a CSM supply contract from the likes of QGC would be very bankable.

There are a number of major risks to any project financing, just one of them being technology.

If the essential technology (eg Air Products LNG) is tried and true (which it certainly was not with the mooted magnesium metal projects or the shale oil projects, nor would it be with the LNG Limiteds of this world) and you involve a big balance sheet technically savvy player like BG I don't think there would be insuperable obstacles to finance.

I accept that you are going to need a multi-multi-well collection system, but these are fairly simple and if you build in enough redundancy individual well failures should not too much of a problem.

I also think it is hard for any rational person to think the oil price is going anywhere but up. While this may represent a bonanza for the oil companies in the short term, it is a concern for a whole lot of reasons all of which have been aired recently. My primary concern in the longer term is that Governments may start to form the view that scarce petroleum resources are far too valuable to be left entirely in the hands of the private sector.

Tony Norris

Director

Austral-Powerflo Solutions

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