* What: Minister Burke to rule on coal seam gas projects
* When: Friday, Oct 22
* Santos, BG projects to add 15.7 mtpa to Australia LNG output
PERTH, Oct 20 (Reuters) - BG Group (BG.L) and Santos (STO.AX) look set to win Australian environmental approval on Friday for coal seam gas projects, clearing the way for final decisions on the $30 billion investments.
Santos' Gladstone LNG project in Queensland and BG's Queensland Curtis LNG are seen producing a combined 15.7 million tonnes per annum (mtpa) of liquefied natural gas, or equivalent to nearly 90 percent of current Australian LNG exports.
Analysts said Environment Minister Tony Burke is expected to approve the projects, despite some speculation that his decision could be delayed after traces of a carcinogenic toxin were found in some exploratory wells at a rival coal seam gas project operated by Origin Energy (ORG.AX).
"The fact that this stuff has been found gives ammunition to the people who want to stop coal seam gas (but) it's been blown out of proportion," said Adrian Wood, an analyst at Macquarie.
"It shouldn't be sending shock waves across the coal seam gas industry."
Analysts said the toxin, BTEX, which the Queensland government has moved to ban in hydraulic fracturing operations used to release gas from coal seams, likely came from contaminated drilling equipment.
Minister Burke's office said it could not immediately comment on whether the timing of the decision would be affected. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
List of the world's LNG exporters: [ID:nSGE69H0EE]
List of Australian LNG export terminals: [ID:nSGE69H0EE]
Factbox on Queensland coal seam gas projects:[ID:nSGE68Q005]
Graphic on LNG exports: link.reuters.com/dab29p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
LANDMARK FOR GAS
As the first LNG projects fed by coal seam gas or coal bed methane, final investment decisions from Santos and BG will signal a landmark for the gas industry, where interest in unconventional sources has ramped up in recent years.
"They are the first large scale coal bed methane to LNG projects, so they put a stamp of approval on that," said Tony Regan, an LNG consultant with Tri-Zen International in Singapore.
BG's Queensland Curtis LNG project, its first in Asia, will also be symbolic for the London-based company, signaling a move into the Asian market, Regan said.
The Queensland coal seam gas projects are part of a larger boom in the Australian LNG industry, which has A$200 billion worth of projects that are expected to make Australia the world's second-largest LNG exporter by 2015.
In Queensland, two other coal seam gas projects, an Origin Energy and ConocoPhillips (COP.N) joint-venture and a Shell (RDSa.L) project, are expected to come online between 2014 and 2017.
Queensland coal seam gas to LNG projects and LNG projects off the coast of Western Australia will nearly double Australia's LNG export revenue by 2014-2015, according to Australian Bureau of Agricultural and Resource Economics (ABARE) projections.
CONDITIONS LIKELY WITH APPROVAL
Although Burke is widely expected to give the go-ahead to the projects on Friday, analysts say he is likely to attach conditions that Santos and BG take steps to mitigate the environmental impact of the projects.
Environmental and farming groups have opposed the projects, saying they may adversely affect water supply from the Great Artesian Basin.
Getting approval for projects under certain environmental conditions is not unusual and none of the conditions is likely to be a dealbreaker, said Graeme Bethune, chief executive of Energy Quest, an Adelaide-based energy consultancy.
But any additional environmental conditions and heightened competition for materials and skilled labour are likely to ramp up the original cost estimates for both projects.
"The costs are likely to be quite a bit higher than those announced a few years ago," Bethune said.
Despite the likelihood of added costs, none of the companies developing coal seam gas projects in Queensland has signaled plans for consolidating projects or infrastructure so far.
"Logic would suggest that they should be, but none of them seem ready," Regan said, pointing out that it would conserve resources to avoid building separate berths and utilities. ($1=1.030 Australian Dollar) (Editing by Ed Davies)