Australia Delays Decision on Santos, BG Coal-Seam Gas Projects to October

The Australian government delayed by three months a decision on whether to approve liquefied natural gas projects proposed by Santos Ltd. and BG Group Plc as it studies their potential impact on the environment.

Australian Environment Minister Peter Garrett extended a review of the Queensland coal-seam gas projects to Oct. 11, spokesman Ben Pratt said today. While Queensland cleared the projects, the state government in May and June raised concerns the “significant amount” of water and salt extracted from the coal seams may pose environmental risks.

“These are the first coal-seam gas projects that have been assessed under national environment law, and it’s important that the potentially significant environmental impacts of these projects” are properly examined, Pratt said.

Santos, Australia’s third-largest oil and gas producer, is among companies planning to convert coal-seam gas to liquid form in Queensland for export to Asia. The project proposed by BG, the U.K.’s third-biggest natural gas producer, may cost as much as A$15 billion ($13 billion) to develop, Australian Resources and Energy Minister Martin Ferguson said in June.

BG’s “position hasn’t changed” and still expects a final investment decision later in 2010 after receiving environmental approvals, said Mark Todd, a spokesman for the company’s Brisbane-based unit. Santos continues to target a decision this year and will provide further details to Garrett “promptly,” said Matthew Doman, a spokesman for the company in Adelaide.

Santos fell 0.2 percent to A$13.79 in Sydney, compared with a 1.5 percent gain in the benchmark S&P/ASX 200 Index.

BG, based in Reading, won approval from Queensland Co- ordinator General Colin Jensen in June, and Santos received clearance in May. Royal Dutch Shell Plc and Origin Energy Ltd. also propose coal-seam gas-to-LNG developments in Queensland.

The additional time will allow the companies to provide further information on “areas identified as deficient” in the coordinator-general’s report, Pratt said. Garrett took the same approach to approving Chevron Corp.’s A$43 billion Gorgon LNG venture off the nation’s northwest coast, Pratt said.

To contact the reporter on this story: James Paton in Sydney

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