Queensland Gas Company and the BOC group have signed a deal to develop a liquefied natural gas plant worth $A100 million at Chinchilla in Southern Queensland. This is reportedly the first plant in Australia to convert coal seam methane gas to liquefied natural gas.

Queensland Premier Anna Bligh announced the deal today at Chinchilla. The new plant is completely for domestic consumption and will provide LNG to create fuel for trucks.

According to the deal, Queensland Gas Company will supply 30 PJ of coal seam gas to BOC for 15 years from July 2011, with an option for a further 15 years. BOC will liquefy the gas at the micro LNG plant at Chinchilla.

The construction of the plant is expected to start in early 2011. However, Queensland will become the first state in Australia to produce LNG from coal seam gas if the companies could complete the project in time.

Queensland Premier Anna Bligh said that this is a start of a new industry for Queensland. Bligh also said that switching of heavy vehicles to LNG is very environment friendly.