Shell gas proposal snags on election

Photo / Supplied.

SYDNEY: Royal Dutch Shell's Prelude project became the third Australian natural gas venture this month to face delays in obtaining environmental approval as the country heads toward an election in three weeks.

The nation's environment department extended a review of the Prelude development by two more months to October 1, a document filed on its website shows.

A decision on Shell's plan to pioneer the use of a floating liquefied natural plant off the nation's northwest coast had been expected by Environment Minister Peter Garrett yesterday following a previous delay.

The minister earlier this month deferred decisions on two LNG ventures proposed by energy producers Santos and BG Group until October 11, saying he needed more time to examine the "potentially significant environmental impacts".

The Santos and BG projects in Queensland state are the first coal-seam gas-to-LNG developments to be evaluated by the Government, a spokesman for Garrett said on July 14. While the Queensland Government cleared the plans, the state's Co-ordinator-General Colin Jensen had raised concerns the "significant" amount of water and salt extracted could pose environmental risks.

The environment department yesterday cited the "caretaker" period leading to the August 21 election as the reason for deferring a decision on Prelude.

The review has been extended until after the "caretaker period because decisions on these types of strategic and complex matters, where there are no clear precedents, must be made by the federal Environment Minister - they cannot be delegated to the department", the department said.

Shell is on schedule to make a final investment decision on Prelude in early 2011, Claire Wilkinson, a Perth-based spokeswoman for Shell, said yesterday. Studies show Prelude has a "very low overall environmental impact, and we look forward to hearing the minister's comments".

Santos and BG said earlier this month that they still expected to reach final investment decisions in 2010.

Shell may become the first to use floating LNG technology aimed at developing gas deposits too small or far from the coast to be profitably exploited through onshore plants.

- Bloomberg