Enertrade will sell and transport coal-bed methane to Xstrata's Townsville copper refinery. The gas is sourced from CH4's Moranbah field. A Moranbah to Townsville pipeline supplies coal-bed methane to a 220 megawatt power at Yabulu.
CH4, which last week announced it had signed Enertrade to increased supplies, said it now had the gas reserves and pipeline capacity to Townsville to fuel a 400 megawatt plant.
Queensland Energy Minister John Mickel described the Xstrata deal as a "tremendous step".
"I welcome Xstrata Copper's decision to convert its Townsville copper refinery from liquid fuel to coal seam gas," Mickel said in a statement.
"The pipeline was built with the aim of generating industrial growth and providing new energy sources for the region and this deal shows that industry is starting to take advantage of this project."
Enertrade owns and operates the pipeline which extends from Moranbah to Townsville.
Xstrata Copper chief executive Charlie Sartain said the conversion to coal-bed methane would significantly improve operating costs and reduce greenhouse gas emissions.
