In September, the board of Alcan formally approved the expansion of their alumina refinery on the Gove peninsula in the Northern Territory. The expanded refinery is expected to be powered by gas transported through a pipeline from the Blacktip gas field, crossing nearly 1,000 km of the Northern Territory.

The expansion is estimated to increase the refinery’s capacity from about 2.1 million tonnes per year to approximately 3.8 million tonnes. Alcan’s decision to proceed with the expansion follows the Northern Territory government’s approval of the associated Environmental Impact Statement in July of this year.

The expanded refinery is expected to be fully operational by 2007.

In June 2003 Woodside, Eni Australia B.V. (a subsidiary of Italy's Eni Group) and Alcan Gove signed an exclusive heads of agreement specifying key commercial terms for the supply of natural gas from Blacktip in the Joseph Bonaparte Gulf, offshore permit WA279P to the refinery.

Article continues below…

The agreement proposed gas supply of 40 petajoules a year over 20 years from 2007. Blacktip gas provides Alcan with a long-term secure and clean energy source capable of supporting the gasification and expansion of its Gove alumina refinery.

The agreement was conditional on Alcan and the Blacktip partners each making a final investment decision, obtaining regulatory approvals and concluding pipeline arrangements to transport gas from the Joseph Bonaparte Gulf to Gove.

A final decision from Woodside on Blacktip is still anticipated. Recent drilling results from the nearby Polkadot-1, which is part of permit WA-313-P and about 30 km north of Blacktip suggest there may be sufficient reserves to tie in to Blacktip to further enhance the commercial prospects of the development.

The pipeline is expected to be DN 400 with a MAOP of 15,300 kPa, API 5L X70 with a two-layer FBE coating. The pipeline will cross two highways, one railway, another pipeline and many rivers and more than ten HDD crossings are anticipated.

The initial capacity of the pipeline will be 40 petajoules per annum but could be increased to over 75 petajoules per annum. Contractors have been short listed and construction is expected to take place during the dry seasons in 2005 and 2006.

The PNG-Queensland Pipeline

The long-anticipated, and long-delayed, PNG to Queensland pipeline is edging closer to reality after OilSearch recently declared that the project was ‘FEED-ready’ and awaiting a formal decision to proceed,

The owners of the project have successfully confirmed all requirements to enter FEED and are continuing to work with stakeholders involved to accelerate the required shareholder approvals. Once an approval decision is reached, the owners will vote on entering FEED and are anticipating a positive outcome from the vote.

The delay is due to ongoing negotiations with Gladstone-based Queensland Alumina (QAL) who would be a major customer of the pipeline. QAL has been negotiating a 10-year contract since November 2003 and management has decided to go ahead with PNG gas subject to board approval.

DBNGP Expansion

A consortium comprising Diversified Utility & Energy Trusts (DUET), Alinta and Alcoa has been named as the preferred bidder for the purchase of 100 per cent of the 1,530 km Dampier to Bunbury Natural Gas Pipeline (DBNGP) and associated assets.

The consortium’s offer is subject to limited conditions including the finalisation of shipping arrangements and completion of further due diligence which were ongoing at the time of writing.

The sale appears to bring to a close the tumultuous events since the pipeline was sold for $A2.4 billion six years ago to Epic Energy and finalises the withdrawal of US pipeline owners from the Australian market. The pipeline was put on the market late last year and was placed into receivership in April this year.

The consortium has undertaken to expand the pipeline to ensure security of supply to southwest Western Australia in the coming years and while the details of the expansion are not yet known it will certainly be a major undertaking.