April 22, 2009 / 1:13 AM / 11 years ago

UPDATE 1-Origin pays $470 mln for coal seam gas reserves

* Origin pays A$660 mln for coal seam gas exploration permit

* Says permit will boost its reserves by 1,150 petajoules (Adds details, background)

PERTH, April 22 (Reuters) - Australia’s Origin Energy Ltd (ORG.AX), which plans to build a major gas export facility, has entered a conditional agreement to acquire a coal seam gas (CSG) exploration permit for A$660 million ($469.4 million).

Origin said on Wednesday it was buying the permit from the Pangaea group of companies and expects to book proved, probable and possible (3P) reserves of around 1,150 petajoules (PJ) plus contingent resources of about 500 PJ from the tenement in northeastern Queensland state.

Origin is in a joint venture with U.S. energy major ConocoPhillips (COP.N) to build one of Australia’s largest liquefied natural gas (LNG) export facilities using coal seam gas, with the project seen costing about A$35 billion over 10 years.

The project is targeted to produce 3.5 million tonnes of LNG in 2014, with the potential to increase output to 14 to 16 million tonnes a year in later phases.

Origin said gas produced from the tenement, which is located next to proven CSG fields in the Undulla Nose region, could either be used for the planned LNG project or sold to the domestic market.

As many as eight proposed LNG projects in Queensland are vying to boost their CSG reserves to underpin ambitions to export the fuel.

Global players including Malaysia’s Petronas [PETR.UL] and Britain’s BG Group BG.L, have poured about A$22 billion into Australia’s coal seam gas companies since last year to secure reserves to feed a global rise in LNG demand.

Demand for LNG, which is gas frozen as liquid for export in ships, is forecast to more than double by 2020 amid an increase in energy consumption and demand for cleaner-burning fuels. ($1=1.406 Australian Dollar) (Reporting by Fayen Wong, Editing by James Thornhill)

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