Queensland is expected to produce more liquefied natural gas (LNG) by 2020 than Australia's total present output, energy economics firm EnergyQuest says.

Queensland LNG capacity is set to reach at least 25 million tonnes within nine years, according to the South Australian company's annual review of the industry. Australia produced 20.8 million tonnes of LNG in the 12 months to June 30.

EnergyQuest chief executive Graeme Bethune said Asian demand for Queensland LNG extracted from coal seam gas (CSG) had been outstanding, considering CSG-to-LNG had never been done before.

However, labour shortages were likely to be a major constraint on projects meeting their timetables, EnergyQuest said.

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"Shortages are only beginning to emerge but are expected to intensify in 2012, particularly for project sub-contractors," it said yesterday.

Tens of billions of dollars worth of these developments are under way in the state.

One of Queensland's biggest CSG-to-LNG projects, Origin Energy and ConocoPhilips' A$35 billion ($44 billion) Australia Pacific LNG joint venture on Curtis Island off Gladstone, last month got the final investment decision to go ahead.

Yesterday, Royal Dutch Shell and PetroChina-owned Arrow Energy awarded a contract to an international consortium for front-end engineering design of a LNG plant that may have up to four processing "trains" on Curtis Island that could produce 16 million tonnes a year.

EnergyQuest also said further expansion of Queensland's LNG capacity to about 32 million tonnes appeared feasible by the mid 2020s, subject to continued demand and the delineation of sufficient gas reserves.

Separately yesterday, Western Australia Premier Colin Barnett said Australia should establish a LNG receival point on the East Coast so that the country could use more of the energy it produces, rather than exporting it.

He suggested somewhere like Gippsland in Victoria, "so that gas can be transported in liquid form around Australia."

"Why wouldn't we make a simple policy decision as a country and use some of Australia's natural gas for power generation and distribution here, and do what Japan, Korea, China and India are quite deliberately doing," Barnett said on ABC Radio.

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- AAP