In its annual strategy update and full year 2009 results, BG Group Chief Executive Officer Frank Chapman said that the LNG processing plant and export terminal at Curtis Island will now have an initial production capacity of 8.5 million tonnes per annum (MMt/a) from two LNG trains, with the potential for a third train. The company had initially designed the plant to produce a capacity of 7.4 MMt/a of LNG.

Mr Chapman also announced the award of the engineering, procurement and construction management contract for the project’s LNG processing plant to Bechtel Oil, Gas & Chemicals. Materials and equipment for the construction of the pipeline are now being purchased.

Subject to approval of the environmental impact statement, and a final investment decision by the end of 2010, construction of the project is set to commence in the second quarter of 2010. LNG production is expected to commence in 2014.

BG Group/QGC plan to develop an onshore coal seam gas (CSG) to LNG production and export facility on the Queensland coast, including a 340 kilometre, 42 inch diameter pipeline from QGC’s Surat Basin tenements to the LNG plant.

Mr Chapman said that up to 6,000 gas production wells at the company's Surat Basin tenements have been planned over the life of the project, including an initial 1,800 wells to be drilled across the gas fields by mid-2014, an increase from initial estimates of 1,500 wells.

The company has 37 wells planned for the Surat Basin region, and has said that resources in the Bowen Basin will also be utilised in future potential expansions.

“At the moment, we’ve identified 12.7 trillion cubic feet (Tcf) of CSG in the Surat Basin – we also have 1.3 Tcf of domestic CSG obligations. We are working to prove up more reserves and in time that will support a further train of LNG,” Mr Chapman said.

The project has been underpinned by deals with China, Chile and Singapore to provide 8.3 MMt/a of LNG.

BG Group signed an LNG Project Development Agreement with China National Offshore Oil Corporation in June 2009 to purchase 3.6 MMt/a of LNG for a period of 20 years from the start up of the project, as well as 5 per cent of BG’s interest in the reserves and resources of certain tenements in the Walloons fairway of the Surat Basin.