MELBOURNE (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, said it expects the first production from a proposed liquefied natural gas project in Australia’s Queensland state as early as 2014.

The Shell Australia LNG venture on Curtis Island near the city of Gladstone may be capable of producing as much as 16 million metric tons a year of the fuel using coal-seam gas, Shell said in a report filed with the state government. Shell will start work on an environmental impact report for the project, it said in a separate statement on Friday.
The project would be the fifth venture planning to tap gas extracted from coal seams in central Queensland for conversion to liquid form and export to Asia. Australia’s coal-seam gas industry attracted about $22 billion in investment last year and BG Group Plc and ConocoPhillips are among companies with stakes in rival LNG ventures in the state.
The Hague-based Shell proposes building as many as four trains, or production units, at Curtis Island, it said in an Initial Advice Statement, posted on Queensland’s Department of Infrastructure and Planning Web site.
Shell Australia LNG’s projected size would match the venture proposed by Origin Energy Ltd. and ConocoPhillips as the state’s largest coal-seam gas to LNG facility.
Output is projected to start in 2014 or 2015 for export to Asia and “possibly” the Atlantic markets to gain from increased demand for cleaner energy and predicted global energy deficits, Shell said in its statement to the Queensland government.
The project will use coal-seam gas from fields owned jointly with Arrow Energy Ltd., Shell said. It agreed in June to pay as much as $700 million for a 30 percent stake in Arrow’s coal seam gas acreage in Queensland and a 10 percent interest in Arrow’s international unit.
Shell is in talks with Arrow and others to buy additional gas to support the project, it said. Coal-seam gas is mostly methane found on the surface of coal. The gas can be extracted when pressure on the seams is reduced, usually by removing water. LNG is natural gas chilled to liquid form for transport by ship to destinations not connected by pipeline.