On the largest island in the Great Barrier Reef World Heritage Area, $80 billion of liquefied natural gas terminals are helping feed China's hunger for energy. The next major construction project may appeal to its tourists.
Four decades after his father bought a cattle property on Curtis Island, American businessman Tim Reigel is seeking government approval to turn it into a five-star holiday destination. It's the latest chapter for the 30-by-15-mile strip, located beside the famous coral reef, which Queensland authorities predict will become one of the world's largest LNG hubs.
The gas-to-guests transition is a microcosm of the shift happening in our economy. At the tail end of the biggest resources boom since the 1850s Gold Rush Australia, is counting on tourists, especially from China, to help soften the plunge in mining and energy investments. These days, the majority of people coming to the tropical isle are there to help build the LNG facilities, not for the pristine beaches or endangered dugongs and snubfin dolphins. But once the projects are completed, most of those workers will leave.
"LNG is a tiny part of the Curtis Island story," Reigel said by phone from his Los Angeles home. "I don't care how many billions they've spent on it. Most of the island experience is very divorced from that."
The three LNG projects on the island occupy about 2 per cent of the land area on its southwestern tip, a couple of miles from Gladstone.
The island's workforce has already halved from a peak of 14,500 people last year and will drop to a "very small number" next year, according to contractor Bechtel Group. The last project, a ConocoPhillips-Origin Energy venture, is due to start production this month.
The exodus is hurting local businesses, such as Scotties restaurant, two blocks from the harbour, which once counted among its clientele directors of BG Group, which operates the $US20 billion ($24 billion) Queensland Curtis LNG plant.
"I had three fantastic years, like everyone else, when all the big guys were coming to town -- the engineers, the executives," owner Scott McCarthy said. "Now, it's been going downhill at a rapid pace. What we need is another big project to be announced, but with the commodity markets being as low as they are, that's probably not about to happen."
Cheaper holiday
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Fresh sources of income are needed to fill the gap, said Janu Chan, an economist at St. George Bank in Sydney. Tourism may help, especially after the Aussie weakened over the past year, making it cheaper to holiday in Australia for most overseas visitors.
Gladstone, originally named Port Curtis, is starting to woo travelers. Carnival Corp.'s P&O Cruises is scheduled to dock there six times next year, letting passengers visit the reef or even take a boat tour of the LNG plants, said Mayor Gail Sellers. Still, she's not counting on Curtis Island drawing crowds of holidaymakers anytime soon, she said.
Yellow patch
Unlike the Whitsundays, about 600 kilometres further north, with their white sandy beaches, azure water and dense rain forest, the island that English explorer Matthew Flinders landed on in 1802 is more rustic and rugged. Among Curtis Island's features are a 20-story-high sand dune, called Yellow Patch, tranquil billabongs and flatback turtle nests.
Its raw beauty may pose a challenge to resort developers, said Graham Reynolds, a Brisbane picture framer who wrote a book about Curtis Island's history.
"Perhaps you might get clever operators who can wrest some of that latent charm out of the place," said Reynolds, who spent part of his childhood on the island, where his uncle was a maritime pilot.
Universal Partners, a Dutch real estate investment company, had planned to develop the northern tip of Curtis Island, which it said was the largest freehold, or non-leased, island-property in Australia. The plan didn't gain traction with state and local governments and was shelved almost a decade later, said Rob Johnson, a designer who worked on the project and is now based in Jakarta.
Luxury villas
"Sooner or later there will be a resort on Curtis Island," said Reigel, who is pushing ahead with his plans for Turtle Street Beach Resort, a $100 million project featuring 177 luxury villas and appartments, tennis courts, pools, a bar and restaurant. The proposal has drawn interest from Chinese investors, he said.
If approved by the federal government, design work could begin immediately with the first stage of construction finished by the end of 2017, according to documents that Reigel's company, QRE, filed last month with environment authorities.
Reigel's father, Bill, a former stockbroker, led a group of US investors that acquired the cattle property, Monte Christo, in the mid 1970s with the goal of building a resort there. The proposal stalled in the 1980s, while the government considered setting up a naval base on the island.
In 1989, three years after his father died, Reigel started the effort to obtain state and local government clearance, the filing shows. The plans have been tied up in a "complex" approvals and negotiation process with government agencies since, while about 14,000 hectares have been given up for national and conservation parks.
'Fly on an elephant's behind'
The impetus for tourism developments is increasing. The federal government estimates thousands of extra rooms are needed in the nation's capital cities and in Queensland to meet its target of doubling visitor spending to as much as $140 billion by 2020 - and investors are responding. The country has the strongest hotel pipeline in more than a decade, said Karen Wales, senior investment specialist at the Australian Trade Commission.
Current projects in Queensland include the $600 million redevelopment of Lindeman Island and plans by Aquis Group, controlled by Hong Kong developer Tony Fung, to build an $8 billion casino-resort with 7500 rooms on a former sugarcane farm north of Cairns.
Although industries outside minerals and energy are helping the economy, they are unlikely to plug the investment hole that resources companies have left, St. George's Chan said. Resources-related infrastructure projects total more than $90 billion in the Gladstone area alone.
"We're a fly on an elephant's behind in terms of the size and type of projects that happen around Gladstone," Reigel said. "But the role we fill is helping to provide diversity to the industrial base."
Bloomberg
