BG Group ships first LNG from Queensland's Curtis Island project

Gas producer BG Group began loading its first liquid natural gas (LNG) shipment on Sunday at its Queensland Curtis LNG (QCLNG), a week behind guidance but sooner than many sceptical analysts had predicted.

The Queensland Curtis LNG (QCLNG) project, which is expected to be strongly cash positive next year, is the world's first project to turn gas from coal seams into LNG.

The project has been forecast to have a gross total resource of 29 trn cubic feet of gas.

"This is an immense achievement which demonstrates the company's ability to deliver a highly complex LNG project," said interim executive chairman Andrew Gould.

"The project will expand further with the start-up of the second train in the third quarter of 2015. At plateau production, expected during 2016, QCLNG will have an output of around 8 million tonnes of LNG a year."

There has been considerable scepticism around management's late-December date, UBS noted recently.

But the broker said that "meeting the start-up guidance will also be helpful in boosting credibility."

"Initial ramp up and profit contribution is still somewhat opaque but undoubtedly T1 followed by T2 around six months later will contribute significantly with Brazil to an earnings and operating cashflow pick-up and a dropping off of capex which should very meaningfully enhance free cash."

The QCLNG project connects more than 2,000 onshore wells, which flow into a 540-kilometre pipeline to the liquefaction facility on Queensland's Curtis Island.

After the gas reaches the plant on Curtis Island it is chilled to minus-162 degrees Celsius, changing the gas to a liquid form which makes it 600 times smaller and so enables it to be stored and shipped overseas.