The Queensland Government has opened a new site near Chinchilla which will be used exclusively for the domestic market by its owners APLNG and Armour Energy.
APLNG is owned jointly by Origin, Conoco and Sinopec which means FIRB approval will be required for the deal to go ahead.
But that won’t be a problem given the national interest in opening more gas supply for the East Coast market.
Incitec boss Jeanne Johns has also secured a deal with APA to carry the gas to its Brisbane plant which comes some 50 years after Incitec underwrote one of the state’s first gas pipelines, the Roma to Brisbane pipeline.
The deal will boost Incitec’s earnings by about $5m a year.
The APA deal also comes just before its outgoing boss Mick McCormack is replaced by Rob Wheals in early July. McCormack spent 36 years at APA.
The landmark Queensland deal comes amid a slew of bad energy news, with manufacturers closing shop because they can no longer get gas at competitive prices in Australia.
Incitec’s Johns has managed to secure a deal to keep the plant operating until at least 2022 by which stage the problems with Australian gas will hopefully be sorted.
ACCC boss Rod Sims has urged the NSW and Queensland governments’ to lift development bans on new gas tenements needed to supply the East Coast market.
The high priced gas on the East Coast comes at a time when the Gladstone LNG plants are shipping Australia LNG around the world but there is not enough to supply the Australian market.
The issue underlines the Federal Government’s failure to secure a long term energy plan but finally there is a glimmer of hope.
Incitec Pivot’s success in securing gas for under $10 a gigajoule to maintain its Gibson Island urea plant is welcome news for the Queensland economy, saving over 450 jobs at the plant, and it underlines the importance of tapping new supply in the gas debate.