The Queensland government has granted a licence to Surat Gladstone Pipeline Pty Ltd, a wholly-owned subsidiary of Arrow Energy Ltd (Arrow), an emerging global leader in coal seam gas (CSG) development, taking the company a step further in its plans to build the world's first CSG to liquefied natural gas (LNG) export facility.

The 470-km gas pipeline will be constructed from Arrow's CSG operations near Dalby in Surat basin in eastern Queensland, through Chinchilla and Banana Shire to the proposed Fisherman's Landing LNG plant in Gladstone, about 550-km north of Brisbane. The cost of building the pipeline is estimated at around $490 million.

The construction of the proposed pipeline is expected to start in 2011, with the first gas supplied to the Gladstone LNG plant by late 2012.

The Surat-Gladstone pipeline will have an initial capacity of 90 petajoules (PJ) of CSG per annum to meet the proposed export target of 1.5 million tonnes per annum (mtpa) of LNG.

It is planned to augment the pipeline's capacity to 3.4 mtpa at a later stage through mid point compression and a further doubling of the throughput to 6.8 mtpa by addition of full looping of the pipeline.

Arrow chief executive officer Nick Davies said, ''Our gas field development in the Surat Basin is progressing according to schedule, we have an agreement to acquire the Fisherman's Landing LNG project and now the pipeline connecting the two projects has received government approval.''
 
''Arrow is well placed at every stage to make the world's first CSG to LNG shipment in 2012 a reality,'' Davies further said.

The company said the pipeline licence was a major achievement and the project would make a significant contribution to the local, regional, state and national economies, both in the construction phase and during operation.

Brisbane-based Arrow Energy, the Australian partner of global energy major Royal Dutch Shell Plc. in the development of CSG, said earlier this month that the Gladstone LNG project may cost around $1.96 billion and the company may raise funds through a stake sale, debt or share sale to finance the prestigious project.

Fisherman's Landing is one of the five CSG to LNG projects in the pipeline in Queensland and Arrow is the first company to be awarded a licence for a pipeline for the transportation of gas from Surat basin to Gladstone. The LNG project has already obtained the government's environmental clearance.