Coal seam gas faces tax bill of billions

AUSTRALIA'S coal seam gas industry could face future carbon tax liabilities of up to $4 billion a year if ''fugitive'' emissions of methane from unconventional gas production turn out to be substantially higher than expected.

Three huge coal seam gas-to-LNG projects worth $60 billion are under construction in Queensland by BG Group, Origin Energy and Santos. Both BG and Santos have had multibillion-dollar cost blowouts this year. Investors are nervous about costs, execution and rates of return on these LNG projects.

On Sunday, federal Energy Minister Martin Ferguson told the ABC that news last week of a potential $20 billion cost blowout at Chevron's Gorgon project in Western Australia was ''not good in terms of attracting further investment''.

The federal government calculates carbon tax liability for conventional and unconventional gas alike, using estimates that just 0.12 per cent of the produced gas escapes to the atmosphere.

But recent studies of unconventional gasfields in the US and Australia suggest emissions could be 4 per cent or higher.


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