Origin Energy Ltd. (ORG.AU) and ConocoPhillips (COP) have approved construction of their $20 billion gas export venture in Australia's Queensland state in the latest endorsement of coal seam gas, a nascent form of energy that's never been developed on a large scale.

The project is the third to be approved in Queensland designed to liquefy gas extracted from coal seams and ship it to Asian buyers. The unconventional fuel, trapped hundreds of meters below the Earth's surface, has a slightly lower calorific value than conventional natural gas and its development presents new technical challenges. But a growing desire to reduce emissions by using cleaner-burning fuel located in politically stable places is opening up more unconventional gas plays.

Origin and Conoco have given the official green light for construction of their project's first phase, which the Australian energy company said will cost $14 billion to complete. The initial phase will include building the first of two planned LNG processing units, or trains, and some infrastructure to support the second train.

A full two-train project is expected to cost $20 billion, Origin said, in line with a recent estimate by Deutsche Bank of $20.3 million.

China's Sinopec has previously agreed to take a 15% stake in the project for $1.5 billion and will be its foundation customer, buying 4.3 million metric tons of LNG each year. The development, known as Australia Pacific LNG, will have a full production capacity of 9 million tons from its two processing units.

First gas is expected to be shipped from the first train in 2015 and from the second in early 2016.

Discussion with other potential buyers are continuing and Japanese interest in LNG has increased since the Fukushima nuclear disaster in March, Origin Chief Executive Grant King said. "I think it's fair to say that we've seen in the last six months the emergence even of South East Asian countries as buyers as well."

Close to a dozen liquefied natural gas terminals are planned for Australia's coastline to service fuel-strapped customers in Japan and South Korea, and fast-growing developing countries like India and China that have a growing need for fuel. Most of the projects will convert conventional gas to LNG at terminals in Western Australia. Coal seam gas projects operated by BG Group PLC (BG.LN), a venture including Santos Ltd. (STO.AU) and Total SA (TOT), and now Origin and Conoco will feed tankers at the Queensland port of Gladstone. A fourth coal seam gas project is also planned at Gladstone by Royal Dutch Shell PLC. (RDSB) for which official approval isn't expected for at least another one or two years.