Jemena pipeline plan boosts hopes on gas supplies
Jemena has submitted plans to connect a proposed Port Kembla import terminal to its Eastern Gas Pipeline.
The Andrew Forrest-backed LNG import plant in NSW’s Port Kembla has strengthened its case for supplying the Sydney and Melbourne markets after infrastructure giant Jemena proposed extending its existing east coast pipeline to transport gas from the facility to users.
The LNG terminal, developed by Australian Industrial Energy, has been earmarked as a big new source of supply for NSW and Victoria to help fill a pending supply shortfall, although it has yet to sanction the facility amid regulatory uncertainty and energy market ructions.
Jemena, owned by China State Grid and Singapore Power, has submitted plans to the NSW government to connect the proposed import terminal to its 800km Eastern Gas Pipeline, which currently moves gas north from Victoria’s Longford industrial hub to NSW and the ACT.
It plans to expand the pipeline so gas can flow in both directions, helping ease shortfalls that could appear as soon as 2022.
“Everybody is looking at a potential shortfall in supply for gas from 2022 onwards,” Jemena managing director Frank Tudor told The Australian.
The pipeline, with capacity of 360 terajoules a day, has traditionally moved gas from Victoria’s resource-rich Gippsland Basin to users in NSW. However, with production from the state’s big offshore fields starting to decline, the focus has now switched to ensuring new sources of supply can still be sent to the market.
“As the decline occurs in the Gippsland Basin, we’re looking at how we can facilitate new supply sources coming into the country,” Mr Tudor said.
“That could be onshore, but of course there are moratoriums in place at the moment so we also look offshore through LNG import terminals. We certainly see Port Kembla as a very viable terminal to supply the market.”
Conventional gas production on Australia’s east coast hit a 22-year low in the first three months of they year, consultancy EnergyQuest said, piling pressure on new supply sources to come to market.
Jemena, which owns $11bn worth of gas, electricity and water assets, said the first step would involve spending $70m to extend the pipeline about 20km to Port Kembla, creating 180 jobs.
The NSW import plant would supply 100 petajoules of gas annually, equivalent to 75 per cent of the state’s demand, and aims to make a final investment decision by the September quarter. Jemena said it could match that timeline if AIE proceeded with a 12-month construction timeline for the pipeline once planning consent was received.
“We’ve got the ability to take all of their volumes and scale up as they scale up,” Mr Tudor said.
“We think the timing for this year in terms of final investment decisions for the terminal and potentially the pipeline to match probably makes sense. We would try to match their construction period if not better it.”
The Melbourne-based company operates a gas network serving 1.3 million customers in NSW, a Victorian electricity base with 330,000 customers and infrastructure including the Northern gas pipeline linking the Northern Territory to Queensland. Jemena is also working on the inland Galilee pipeline to provide more gas to the east coast market.
AIE is a consortium of Mr Forrest’s privately owned Squadron Energy, Japanese trader Marubeni and JERA, an LNG-buying joint venture between Tokyo Electric Power Co and Chubu Electric.
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