Origin Energy Ltd., Australia s second-biggest power retailer, said on Tuesday it would invest an additional A$114 million (US$86 million) in its Spring Gully coal seam gas project in Queensland state. The investment would double the capacity of the project to 85 terajoules per day (80.15 million cubic feet) and allow Origin to supply natural gas to various Queensland businesses including fertiliser company Incitec Pivot and state-owned energy retailer Energex, the company said in a statement.

As natural gas resources decline, Australia s coal-seam methane is seen as an alternative, alongside overseas sources such as Oil Search Ltd s Papua New Guinean gas pipeline that could deliver gas from the small Pacific island nation into Queensland.

Australia, the worlds largest coal exporter and one of the first countries to begin commercialisation of coal-seam methane, has large coal deposits along the length of its eastern seaboard, with government projections suggesting the resource can sustain production for the next 200 years.

Methane is held in coal-seam cracks and its extraction offers reduced greenhouse emissions, safer mining conditions and a valuable source of fuel in times of soaring energy costs. Origin s shares rose 1.2 percent to A$7.48 compared with a 1.4 percent rise for the broader market. (US$1=A$1.33)
(Planet Ark, 26/07/2006)