Study supports CSM GTL plant: Arrow

PRELIMINARY research supports the construction of a $1 billion gas-to-liquids plant on Queensland’s central coast, according to Arrow Energy.
Study supports CSM GTL plant: Arrow Study supports CSM GTL plant: Arrow Study supports CSM GTL plant: Arrow Study supports CSM GTL plant: Arrow Study supports CSM GTL plant: Arrow

The coal seam methane mid-cap said the results of a feasibility study, undertaken in partnership with alumina producer Alcan South Pacific, showed that a GTL plant in this region was both “technically feasible and economically attractive”.

But Arrow said more feasibility and engineering studies were needed to confirm these initial findings.

The proposed GTL plant would use 180 terajoules per day (or 66 petajoules per year) of gas from Arrow’s CSM activities in the region to create 20,000 barrels per day of liquids, comprising 70% ultra-low sulphur diesel, 25% naphtha and 5% liquid petroleum gas.

Such a plant would cost about $1 billion to build, with cash operating costs of about $10 per barrel, according to engineering company GHD, which conducted the study.

“Using reasonable assumptions for cost of delivered CSM and mid-range, long-term oil forecast, the project would deliver a very attractive rate of return with significant upside from higher oil prices,” Arrow said.

The company said it believed its “substantial land position” in around the Gladstone/Rockhampton area, together with potential supplies from its Bowen Basin interests, was sufficient to meet the 1500-2000PJ of gas reserves needed to support such a project.

In order to meet that target, Arrow now intends to start proving up reserves in the region.

Arrow said that according to analysts, a 25% interest in a 10,000 bpd GTL plant could generate $50 million in annual net revenue.

In addition, the company will also now start a study into the feasibility of converting its CSM reserves to compressed natural gas for export to New Zealand.

Arrow is not the only one exploring GTL opportunities in Australia.

Last month, Chevron Australia and SasolChevron announced they were undertaking a feasibility study into establishing a world-class GTL plant in the Pilbara, northwestern Australia.

And this time last year, frontier junior Central Petroleum released positive findings from its own research into a GTL plant for central Australia.

GTL diesel is said to offer lower greenhouse gas emissions than petrol without the high sulphur and particulate emissions of conventional diesel. It is also compatible with existing diesel engines and distribution systems.