Pressing on with its ambition to be one of the first Australian companies to turn coal seam gas into LNG for export, Eastern Star Gas (ASX:ESG) has launched a $100 million share placement and declared it has acquired land for a small-scale LNG processing plant in New South Wales.

Meanwhile, far bigger players such as BG Group and Royal Dutch Shell are competing to be the first to super cool coal seam gas for export from huge projects in Queensland, scheduled to go live from 2014.

Eastern Star and its Japanese partners Hitachi and Toyo Engineering are claiming regional energy demand will rise rapidly that there will be a need to concentrate on small-scale natural gas reserves too, particularly in Southeast Asia.

New shares in the Sydney-based miner are being issued with an underwritten floor price of 82 cents each. The final issue price is to be set by a bookbuild.

Trading for Eastern Star's existing shares, which last levelled at 10.4 per cent higher than the floor price at 91.5c, has been suspended until no later than tomorrow morning.

Eastern Star refused to comment on whether Santos, which owns 20 per cent of the company, plans to participate in the placement.

It said it aims to begin exporting 1 million tonnes of LNG annually from a $1 billion processing plant at the port of Newcastle by 2014.

The company also announced today that it has consented to buy a 24-hectare parcel of land on Kooragang Island, Newcastle for $25m exclusive of pre-transaction costs and taxes.

Some of the proceeds from the raising will be used for ongoing exploration costs of about $48m and front-end engineering and design costs of about $34m for the proposed LNG plant.

Credit Suisse and the Royal Bank of Scotland are the joint lead managers of the placement.