Basin review, CSG, LNG, Markets, Offshore, Projects, Technology

Wrapping up major gas projects in Australia

While LNG has dominated the focus of the Australian gas industry in recent times, a number of major gas projects, including power generation and transmission, are progressing, promising to deliver natural gas to homes, industry and for export.

Gas for export

Late last year, Federal Minister for Resources and the Environment Martin Ferguson said “Australia’s abundance of energy resources provides an enormous competitive advantage for Australian industry. But the great challenge we face is to keep it that way.”?

He said the challenges of export involve exploiting the nation’s gas resources “in a way that advances the nation’s economic and environmental interests while providing energy security for our trading partners.”?

Chevron gets gas

The Western Australian LNG project that made the biggest headlines in 2009 was certainly the Chevron-operated Gorgon LNG Development. After a final investment decision in September, Chevron, in joint venture with Shell and ExxonMobil, awarded a succession of contracts for work on the project.

The project is based on the installation of a subsea gathering system of pipelines from the Gorgon and Jansz fields to Barrow Island, where gas will be processed by three proposed 5 million tonnes per annum (MMt/a) LNG trains. LNG will be shipped to international markets – Chevron has signed agreements with Chubu Electric Power, Nippon Oil, Osaka Gas, and Tokyo Gas for the supply of LNG from the project – while compressed domestic gas will be delivered via a 90 km subsea pipeline, connecting with the onshore Dampier to Bunbury Natural Gas Pipeline.

Chevron also plans to commercialise its Wheatstone gas field, located 145 km off the Pilbara coast, through the proposed 8.6 MMt/a Wheatstone LNG Development. The field contains an estimated 4.5 trillion cubic feet (Tcf) of gas, which would be processed by two initial 4.3 MMt/a trains, with a possible additional three trains. Chevron has also signed an agreement with Apache and Kuwait Foreign Petroleum Exploration Company for the provision of natural gas to the project from their Julimar and Brunello fields, located on the North West Shelf. The development will also involve a 250 million cubic feet per day (MMcf/d) domestic gas plant.

Woodside Browses for LNG

Woodside Petroleum’s Pluto LNG Project, located on the Burrup Penninsula, Western Australia, will process gas from the offshore Pluto and Xena gas fields. The project is underpinned by two 15-year sales agreements with Kansai Electric and Tokyo gas for a total of up to 3.75 MMt/a of LNG. The first 4.3 MMt/a LNG train was 82 per cent complete at the time of writing, on track for first gas in late 2010 and first LNG in early 2011. Woodside expects to add a second and third train pending a final investment decision scheduled for the end of 2010 and end of 2011, respectively.

Woodside, in joint venture with BHP Billiton, BP, Chevron and Shell, is also developing the Browse LNG Project, which involves offshore facilities and two LNG processing trains, each with a capacity of 7 MMt/a.

Feedstock gas will be sourced from the Brecknock, Brecknock South and Tarosa (formerly known as Scott Reef) fields, estimated to contain reserves of over
14 Tcf of gas and 370 MMbbl of condensate. The fields are located approximately 425 km north, northwest of Broome in Western Australia. The onshore facilities will be located on a site just south of James Price Point. The first cargo from Browse could be delivered from late 2012-14 subject to additional appraisal and customer negotiations. This will require a final investment decision to be made by mid-2012.

The progress of the project was boosted by a recent renewal of retention leases in the area. Western Australian Minister for Mines and Petroleum Norman Moore encouraged the joint venture partners to work together to achieve the earliest possible commercialisation of the Browse resources. “We look forward to seeing this significant resource being developed for the benefit of both the Browse joint venture and the Australian community.”?

Queensland LNG Projects

A number of LNG projects have been proposed on the Queensland coast, along with pipelines to carry CSG from the Surat and Bowen basins to fuel the projects. In November 2009, Queensland Premier Anna Bligh championed the state’s resources, saying “The gas reserves in Queensland rival anything in Western Australia, and we want to make sure Queenslanders benefit through jobs, growth, and economic opportunity.”?

Australia Pacific LNG (APLNG), a joint venture between Origin Energy and ConocoPhillips, has proposed a four-train CSG to LNG project utilising Origin’s Queensland CSG reserves and resources. The partners finalised a draft environmental impact statement in January 2010, and expect a final investment decision by December 2010. The $35 billion project will involve a 450 km pipeline from Origin’s CSG tenements in the Surat and Bowen basins.

Santos’ GLNG Project will include a 435 km pipeline linking a compression station at Santos’ Fairview and Roma CSG fields in the Surat Basin to the liquefaction plant to be located at Gladstone. Train 2 is expected to commence operation one year after the first GLNG train. A gas supply of approximately 1,200 TJ/d will be required for the two LNG trains. The site could contain up to five LNG trains if required, with a maximum potential production of 10 MMt/a.

Arrow Energy is involved in two LNG projects, both to be supplied from its Surat Basin CSG tenements. Its proposed 467 km, 600 mm diameter Surat to Gladstone Pipeline will carry gas to the Queensland coast from the CSG fields.

The $776 million Shell Australia LNG (SALNG) Project, a joint venture between Shell and Arrow Energy, will involve up to four LNG processing trains with a total capacity of up to 16 MMt/a of LNG.

Arrow has also signed a Heads of Agreement to supply 150 terajoules per day (TJ/d) of gas to LNG Limited for the proposed $410 million Gladstone “˜Fisherman’s Landing’ LNG Project. The design will provide for an initial 2 MMt/a plant, and additional LNG trains of a similar size, subject to the availability of further gas.

BG Group/QGC plan to develop the $8 billion onshore Queensland Curtis LNG Project for the production and export of LNG on the Queensland coast, including a 380 km pipeline from QGC’s Surat Basin CSG tenements to a port site. The LNG processing plant and export terminal at Curtis Island will have an initial production capacity of 8.5 MMt/a from two LNG trains, with provision for a third train.

Exploring gas

As Australia’s ever-growing gas industry enters 2010, the focus is on low emission fuel and security of supply. Natural gas offers a cleaner and plentiful option, and the industry has the opportunity to establish gas as the fuel of choice.

In 2009, Federal Minister for Resources and Energy Martin Ferguson said that natural gas exploration holds the key to Australia’s energy needs.

“We have an obligation to unlock the wealth of Australia’s vast petroleum resources for the benefit of all Australians. Australia’s gas resources are important to supply affordable and reliable energy for Australian industry and households, and also to supply the growing clean energy needs of our neighbours in the Asia Pacific. They are key not only to Australia’s energy security, but to the region’s energy security.”?

Apache Energy and Santos are currently developing an onshore gas plant to process gas from their offshore Reindeer Gas Field. The $260 million proposed Devil Creek Gas Plant will receive gas via a 105 km offshore pipeline from a minimum facility wellhead platform at the field.

An onshore gas pipeline will tie-in to the existing Dampier to Bunbury Natural Gas Pipeline. The proposed production capacity is approximately 110 TJ/d of sales gas with first gas targeted for mid-2010. Clough will perform engineering, procurement and module fabrication works for the gas plant, while John Holland will construct the gas plant and onshore gas pipeline.

Inpex’s Ichthys Gas Project is currently being developed in the Northern Territory. The project involves the construction of an 885 km pipeline linking the offshore gas field to the onshore processing plant at Blaydin Point, Darwin.

The project is expected to have an initial capacity to produce 8.4 MMt/a of LNG, approximately 1.6 MMt/a of LPG and 100,000 bbl/d of condensate at peak. Front-end engineering and design work is underway for both offshore and onshore components of the project. The first shipment of LNG is scheduled to be loaded in 2015.

Natural gas in the pipeline

The largest gas transmission projects in Australia are expansions of major existing pipelines.

One of the largest scale transmission projects currently underway is the Stage 5B Expansion of the 1,596 km Dampier to Bunbury Natural Gas Pipeline (DBNGP), located in Western Australia. Following Stages 4 and 5A which increased the pipeline’s firm full haul capacity by a total of 225 TJ/d, the $700 million 5B expansion project involves an additional 110 TJ/d of capacity, including 440 km of looping and compressor station upgrades. This stage of the expansion is due for completion in the first half of 2010.

Epic Energy has proposed an expansion of its South West Queensland Gas Pipeline and associated Queensland to New South Wales/South Australia (QSN) Link. The expansion project, dubbed QSN 3, will involve 940 km of 18 inch looping and further compression at the inlet of the pipeline at Wallumbilla. QSN 3 will expand the capacity of the pipeline from 168 TJ/d to approximately 380 TJ/d.

Meanwhile, Jemena has recently expanded its Queensland Gas Pipeline, which connects gas fields in the Surat and Cooper basins to markets in Gladstone and Rockhampton. The capacity of the 627 km pipeline is being increased to 49 PJ/a through the addition of compressor stations at Rolleston and Banana, and 113 km of looping from Moura to Bell Creek. At the time of writing, construction of the project was complete and Jemena was completing commissioning activities.

Gas fires up

While coal and natural gas are the lowest cost sources for electricity generation, gas-fired generation is gaining momentum as a lower emissions fuel. According to the Australian Energy Regulator’s report State of the Energy Market 2009, there is over 2,200 megawatts (MW) of committed gas-fired generation capacity across the national electricity market.

In Queensland, two major gas-fired power projects were completed in 2009 – the Braemar 2 Power Station and the Mt Stuart Power Station Expansion. A joint venture between ERM Power and Arrow Energy, the 450 MW Braemar 2 Power Station comprised three 150 MW generation units. The plant, which supplies the Queensland electricity grid, became fully operational in July. The 100 km Braemar 2 Pipeline, also completed in 2009, carries coal seam gas (CSG) to the power station from Arrow’s fields in the Surat and Bowen basins.

Origin Energy completed commissioning on the expansion of the Mt Stuart Power Station in December 2009. The project included the installation of an additional 126 MW gas turbine generator, which increased the output of the station by 45 per cent to a total capacity of
414 MW. Works to expand the station began in February 2009. The station currently runs on kerosene but has been designed so that the generators can run on natural gas in the future.

Origin is also constructing a 630 MW power station in the Darling Downs region of Queensland, which comprises three 120 MW gas-fired turbines and a 270 MW steam turbine. CSG will be processed at Origin’s Spring Gully gas processing plant, then transported through existing pipeline infrastructure to Wallumbilla. A 200 km pipeline from Wallumbilla to the Darling Downs Power Station was commissioned in June 2009. The company has synchronised the first gas turbine to the Queensland electricity grid, and expects full commissioning of the power station in the third quarter of 2010.

Origin is developing a $1.2 billion natural gas-fired power station in western Victoria, 12 km west of Mortlake. The 1,000 MW Mortlake Power Station will be built in stages adjacent to the existing Moorabool to Heywood 500 kV high voltage transmission line. The plant will be supplied with natural gas, from the offshore Otway Gas Project, in which Origin holds a 67 per cent interest, via the 83 km, 500 mm diameter Mortlake Pipeline.

Delta Electricity opened the 667 MW Colongra Gas Generation Plant, located within the grounds of the existing Munmorah Power Station site on the New South Wales central coast in December 2009. A 9 km lateral pipeline connects the facility to Jemena’s 236 km Wilton to Newcastle Gas Pipeline.

ERM Power has been granted final approval to build the $700 million, 660 MW Wellington Power Station in central western New South Wales. The power station, to be located in Wellington, 50 km south of Dubbo, will comprise four 165 MW open cycle gas turbines. Gas for the plant will be sourced from the Young compressor/gas hub facility of the Moomba – Sydney Gas Pipeline via a proposed 220 km gas pipeline. The power station is expected to come online in 2001-12.

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