The State Government says a coal seam gas deal will add $14 billion to southern Queensland’s economy over the next decade.

The Queensland Gas Company (QCC) will pipe gas from the Surat Basin in the state’s south to Gladstone in the central region, and then ship to China from 2014.

The deal is hailed by the Federal Government as the biggest liquefied natural gas (LNG) contract in Australian history, with 72 million tonnes of gas to be exported to Asia over the next 20 years.

Geosciences Australia estimates Queensland has enough coal seam gas to power the entire state for more than 1,000 years.

The State Government says it will generate $200 million a year in royalties for Queensland.

The China National Offshore Oil Corporation signed a deal with the British-owned BG Group yesterday.

The deal is subject to environmental approval as well as from the Foreign Investment Review Board.

‘Ready to go’

Queensland Treasurer Andrew Fraser says he is confident the project will clear any hurdles to its approval.

He says work on the 500-kilometre pipeline from the Surat Basin to Gladstone will start this year.

“There’s certainly a range of approval processes that are undertaken in a project this massive, but what this deal means is that as far as the financing of the LNG development goes, this one’s cooked and ready to go,” he said.

But the state Opposition says the Government has to make sure there is appropriate infrastructure for the gas development.

Opposition spokesman Jeff Seeney says the Government should plan ahead.

“It’s not good enough for the Government to do what they’ve done in the past and wait for the infrastructure to become overloaded and then talk about allocating some money,” he said.

“The Government knows these projects are going to happen in central Queensland. They should be allocating some money now.”

‘Enormous’ benefits

Meanwhile, Queensland Resources Council chief executive officer Michael Roche has welcomed the deal.

Mr Roche says it will make Queensland one of the world’s major energy exporters.

“There will be hundreds of millions of dollars in extra royalties … $10 billion a year in revenue and 18,000 jobs,” he said.

Gladstone Ports Corporation chief executive officer Leo Zussino says the potential benefits for the city are enormous.

“It really cements the potential for the LNG industry to actually happen in Gladstone,” he said.

“Obviously what it means is it gives BG enough sale gas to build three production trains, and what we look forward to now is BG getting through their EIS [environment impact statement] process and hopefully us getting through our dredging approvals ”

Mr Zussino says the region will be transformed.

“Subject the environmental approvals being obtained, I have no doubt that Gladstone is going to be converted into one of the most significant LNG production centres in the world,” he said.

Environmental concerns

Queensland Conservation Council spokesman Toby Hutcheon says he is not entirely opposed to a gas deal.

However, Mr Hutcheon says coal and LNG are big polluters but environmental groups could support the idea if the gas replaced coal exports.

“Both of them are fossil fuels,” he said.

“We are not dead-set against it. The gas is cleaner than coal, but we are still exporting coal.

“This proposal will add to global emissions unless it displaces coal. If Queensland wishes to continue to export coal and export gas it’ll do nothing for climate change.”

Royalties concerns

The Federal Member for Maranoa, Bruce Scott, has welcomed the deal but says at least a third of the royalty needs to be spent in the Surat Basin.

“I think whilst the agreement to sell LNG to China is important, there should also be an agreement written with the regional councils and the community so that there’s a guarantee of royalty money coming back to the region,” he said.

Meanwhile, the State Member for Condamine, Ray Hopper, says the Government needs to keep a closer eye on QGC’s mining operations.

The Petroleum and Gas Inspectorate has issued a compliance notice to QGC to inspect its gas wells in the Tara region, west of Toowoomba, for leaks.

Mr Hopper says it should not be left to residents to monitor operations in the region.

“It is amazing that it has to be the people that actually make the complaint come forward,” he said.

“This should have been catered for and monitored right from day dot, because if anything was leaking that could be detrimental to a lot of things and it’s got to be done properly right from the word go.”

Western Downs Regional Mayor Ray Brown in southern Queensland says the Government must not be swayed by the lucrative royalties generated for the new coal seam gas deal.

Councillor Brown has welcomed the deal but says there are still issues about coal seam gas mining that need to be addressed.

“We do have a lot of concerns on the ground, right through from land access to are they addressing the issues of underground water acquifiers, salt issue, gas extraction issues,” he said.

“They’re regulated by the State Government. It’s just to make sure the State Government don’t look at the huge dollar signs.”

- Reporting by Fidelis Rego, Sam Burgess, Francis Tapim