Coal seam gas producer Queensland Gas Company Ltd (QGC) says it is confident that it will build at least two production trains and possibly three at its proposed Gladstone liquefied natural gas plant in Queensland, in alliance with BG Group Plc of the UK.

"We are planning on a final investment decision by 2010 and first production of LNG by late 2013," QGC chairman Robert Bryan said in the company's annual report, published today.

"By way of comparison, Woodside and its partners on the North West Shelf have taken some 20 years to build five liquefied gas trains of equivalent size," Mr Bryan wrote.

He said while it was a moot point just how many LNG plants would end up being built at Gladstone, "I believe you can count on at least two production trains from the QGC/BG alliance; and our facilities are being developed for a potential capacity of three trains."

QGC has teamed up with UK-based BG Group Plc to develop an LNG plant in Qld using coal seam gas as feed as part of an $A8 billion ($US5.54 billion)development of the sector.

Mr Bryan said QGC intended to play an increasingly important role in the domestic market as climate change policy drives a shift to cleaner fuels for electricity generation.

In addition to Condamine Power Station in southern Queensland, QGC hopes to build further large-scale gas-fired generating capacity to meet market demands.

Mr Bryan said QGC was working towards increasing the flexibility of its gas-delivery supply system for the benefit of all consumers through the development of a pipeline hub at Berwyndale South in Queensland and the establishment of underground gas storage capacity nearby.

Both will be especially important in the domestic market, where we have to cater for peak and off-peak load demands on a daily and seasonal basis.

Last month directors of fellow coal seam producer Sunshine Gas Ltd backed a takeover bid from QGC after an independent expert deemed the offer fair and reasonable.

Australia's coal seam gas (CSG) sector has evolved rapidly since the start of the year, with the entry of major international players all jostling to participate in separate LNG developments in Queensland.

Sunshine has an alliance with Japan's Sojitz Corp and is one of five different groups proposing to develop an LNG project in Queensland.

The merger effectively kills off the Sojitz alliance but QGC has said previously that the company would enter discussions with the Japanese group to see if the relationship could be "kept alive."

(C) 2008 Asia Pulse Pte Ltd.