Shell backs boost to Qld gas amid winter shortage fears

Some good news for the gas-starved east coast of Australia with a deal with energy giant Shell to provide additional supply to help bring down prices.

Some good news for the gas-starved east coast of Australia.

Denison Gas, which is eyeing a possible ASX listing to fund future expansion, has just sealed a deal with energy giant Shell to provide additional supply of up to three terajoules a day to the market from the Bowen Basin next year.

This adds to the previous sales agreement for supply of five terajoules a day. One terajoule of gas provides energy for around 30 homes during a year.

The deal follows the recent news that small gas producers will be exempt from the Federal Government’s price cap so long as they supply the domestic market.

Denison Gas chief executive Benson Wong says the company continues to invest in the business with the goal of making more gas available to the east coast market.

The east coast faces gas shortages every winter until 2026 with production plummeting from offshore fields and delays in sanctioning several LNG import plants needed to boost supplies.

Map showing Denison Gas sites in Bowen Basin

Denison operates 14 gas fields and two gas processing facilities across the Bowen Basin as well as a 200-kilometre gas pipeline network connected to the Queensland Gas Pipeline.

Following the restart of its Denison North project in early 2020, the company embarked on a program to bring its remaining conventional gas reserves into production, to fill its available gas processing capacity. “There is still high demand for gas and we know the government wants to stabilise the market to make prices more reasonable,” says Wong. “We support that plan and will do what we can to contribute to supply.”

Wong says the company, which employs about 100 people mainly at its Bowen Basin operations, is open to an stock market listing along with other capital raising options.

While Australia is among the world’s largest gas exporters, a lack of supplies left available for domestic use have forced the nation into the unusual position of having to develop import plants to ensure enough gas can be sourced for local businesses.

Down the gurgler

The building industry carnage continues in Queensland with a pipe laying contractor and plumbing firm appointing administrators owing millions.

Civforce Civil Pipelaying is being wound up by liquidator Leon Lee, of Morton Lee Insolvency, owing creditors $2.4m after accumulating heavy losses on residential estate projects throughout southeast Queensland.

Separately, Gold Coast-based Obsidian Plumbing has appointed administrators after accumulating debts of more than half a million dollars to the Australian Taxation Office.

Founded in 2016, Civforce Civil Pipelaying undertook numerous projects laying underground piping for new housing estates and developments in southeast Queensland.

In a report lodged with ASIC, Lee said that in excess of $1m in losses were accumulated by the company indicating it did not have enough working capital to meet its liabilities.

“From my preliminary investigations, it appears the company has been insolvent since at least early 2022,” Lee said in his report. “Numerous creditors had commended legal proceedings against the company and there was a lack of available funds to cover trading losses and working capital for the company moving forward.”

Troubled sector

According to the report, the Australian Taxation Office is owed $787,755 while subcontractors and other suppliers are owed about $800,000.

Obsidian Plumbing, whose motto was “laying pipe since 2005”, has appointed David Stimpson, of SV Partners, as administrators. According to a report lodged with ASIC, the company owes the Australian Taxation Office $609,569.69.

Obsidian employed about 60 people working on commercial, residential and multi-unit developments, mining and civil infrastructure. Comment has been sought from both Civforce and Obsidian Plumbing.

Originally published as Shell backs boost to Qld gas amid winter shortage fears