Enertrade said the decision to halt the project came in response to AGL’s plans as there was not enough demand to justify two new power stations in the Townsville region.

CH4 said it was still working on several opportunities to grow future gas sales from the Moranbah Gas Project to customers in Townsville and Gladstone.

In August, CH4 announced in its 2004/05 financial year report that the Townsville South power station project had been upgraded to Significant Project Status by the Queensland government. It said a station this size would use about 20 PJ a year.

But late last week, AGL said it planned to open a A$350 million gas-fired power station in Townsville, North Queensland to coincide with first gas from the PNG pipeline in 2009. The baseload power station will be supplied with gas from AGL's wholesale gas portfolio and is expected to consume around 20 petajoules per annum, the company said.