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UPDATE 1-Australia delays environmental decision on LNG project

Published 12/15/2010, 02:30 AM
Updated 12/15/2010, 02:32 AM

* Delay for procedural reasons, unrelated to toxins

* Final investment decision now postponed (Adds background)

SYDNEY, Dec 15 (Reuters) - The backers of a $35 billion coal-seam gas project in Australia have postponed their final investment decision on the development into the new year because of regulatory delays.

ConocoPhillips and Origin had been due to make a decision on their Australia Pacific liquefied natural gas (LNG) project, in the country's northeast, by the end of 2010.

But on Wednesday, Australia's environment ministry said it needed two more months to make a decision on environmental approval for the project, citing its scale and complexity, and would now make its decision by Feb. 22, delayed from Dec. 21.

The Australia Pacific project is one of several major projects, all centred in the northeast, which plan to draw gas from coal deposits and turn it into LNG for export.

The ministry's delay was unrelated to the recent discovery of traces of a carcinogenic toxin in some of project's exploratory wells this year, a spokeswoman for Origin said.

Origin has said that an investigation found there was no significant risk to the environment or human health from the toxin, which was found in tiny amounts. [ID:nSYU010732]

The project will have an initial capacity of 4.5 million tonnes per annum (mtpa), eventually ramping up to 18 mtpa, was originally scheduled to come online at the end of 2014. (Reporting by Narayanan Somasundaram and Rebekah Kebede; Editing by Mark Bendeich)

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