Australia’s coal seam gas (CSG) production reached approximately 150 PJ during 2008 – an increase of 39.1 per cent from 2007 levels.
CSG reserves in Queensland in particular are being pegged for export, with a number of major overseas companies acquiring interests in the many proposed CSG to LNG projects to be located at Gladstone.
In addition, a recent report by the Australian Petroleum Production & Exploration Association said that CSG production now represents over 13 per cent of domestic gas supply in Australia.
An abundance of reserves means a need for further infrastructure to transport gas to market and the pipeline industry has been busy ensuring that the necessary transmission is in place.
The last year has seen many pipeline projects servicing CSG fields completed, with many others either under construction or in planning. Here, The Australian Pipeliner looks at future pipeline possibilities surrounding CSG projects.
Queensland
CSG supplies approximately 70 per cent of the Queensland gas market, and new pipeline infrastructure to transport additional gas continues to be developed.
Braemar pipelines
Delco recently completed construction of Arrow Energy and ERM Power’s 16 inch diameter, 107 km Braemar 2 Pipeline, running from Condamine to the new 450 MW Braemar 2 Power Station at Dalby.
The Braemar 2 Power Station and pipeline follows the construction of the Braemar 1 Power Station and associated 16 inch, 115 km pipeline, which was completed in 2007.
Arrow and ERM have since mooted the construction of the proposed 450 MW Braemar 3 Power Station and pipeline. Financial close of the project is set to occur in mid-2010, with operation expected from late 2011.
QSN Link
Epic Energy’s Queensland/South Australia/New South Wales Link (QSN Link) Pipeline was officially opened in May, following the completion of construction by Nacap in December 2008.
The pipeline interconnects Australia’s eastern pipeline network. The pipeline is a 180 km, 400 mm diameter extension of Epic’s South West Queensland Pipeline (SWQP) and has been designed to transport up to 250 TJ/d when fully compressed.
The QSN Link will transport gas from the Wallumbilla gas hub through the SWQP to connect with the Moomba to Adelaide Pipeline system and the Moomba to Sydney Pipeline.
Epic and AGL have also committed to a further expansion of the SWQP by January 2013. Epic is currently completing front-end engineering and design (FEED) study for the further expansion, dubbed QSN3.
Berwyndale to Wallumbilla Pipeline
Also this year, Diversified Construction Corporation (DCC) completed construction of the 400 mm diameter, 113 km Berwyndale to Wallumbilla Pipeline.
The purpose of the pipeline, along with the Wallumbilla Compressor Station (WCS) and the QSN Link, is to enable CSG to be transported from southwest Queensland to gas markets in southwest and central Queensland, South Australia and New South Wales.
DCC also completed the installation of a 27 km export pipeline connecting the processing facilities at QGC’s Berwyndale South Gas Field to the Berwyndale to Wallumbilla Pipeline. In addition, DCC constructed a 30 km pipeline to connect the Berwyndale South and Windibri fields to the Condamine Power Station, and a 25 km export pipeline connecting the Kenya processing plant to the Berwyndale processing facilities.
Wallumbilla to Darling Downs Pipeline
Nacap has completed construction activities on Origin Energy’s Wallumbilla to Darling Downs Pipeline, which forms part of the expansion of the company’s Spring Gully CSG Field in the Surat Basin. The
$90 million, 200 km pipeline runs between the gas hub at Wallumbilla to the Talinga field and the proposed Darling Downs Power Station.
Icon Energy Surat Pipeline
In January this year, Icon Energy signed a farmin deal with the Queensland Government’s Stanwell Corporation to develop a 110 km pipeline to connect the joint venture project’s Surat Basin tenements with the existing Queensland gas market.
Gladstone CSG to LNG Projects
The seven proposed CSG to LNG export projects proposed for the port of Gladstone will require extensive pipeline infrastructure to connect the port to the Surat and Bowen basins.
Queensland Curtis LNG Project
QGC/BG Group have proposed a 380 km pipeline to link QGC’s Surat Basin tenements to a site on Curtis Island for the Queensland Curtis LNG Project. The $12-14 billion project is set to have an initial 3-4 MMt/a LNG train, with an ultimate capacity of 12 MMt/a as reserves become available.
Bechtel has commenced FEED for the LNG plant, with procurement and construction planned to follow a final investment decision (FID) on the project, scheduled for early 2010.
Gladstone LNG (GLNG) Project
Santos and Petronas have agreed to construct a 450 km pipeline linking a compressor station at Santos’ Fairview CSG Field to a 3-4 MMt/a liquefaction plant at Gladstone. GHD has been awarded the FEED contract for the pipeline. FID for the $5-7 billion Gladstone LNG (GLNG) Project is expected by the end of this year, and first LNG cargoes are expected early in 2014.
Gladstone “˜Fisherman’s Landing’ LNG Project
LNG Ltd has proposed the Gladstone “˜Fisherman’s Landing’ LNG Project, which will have an initial design capacity of 1.5 MMt/a of LNG, with the provision for expansion of up to
3 MMt/a, subject to availability of additional gas. The plant will source gas from Arrow’s Moranbah Gas Processing Plant via Arrow and AGL’s proposed
440 km Central Queensland Gas Pipeline (CQGP).
The $457 million pipeline is a joint venture project with AGL Energy and is set to form a key link in delivering CSG from the Moranbah Gas Processing Plant to Gladstone, where it will connect into the Queensland pipeline grid.
Arrow is continuing with engineering studies and land acquisition for the pipeline, and expects to call for expressions of interest for the design and construction of the pipeline in 2010-2011.
Arrow CSG to LNG Project
Arrow is also planning a CSG to LNG Project with Shell, involving a 400-500 km pipeline to run from Arrow’s Surat Basin tenements to Gladstone. The pipeline would require an investment of approximately $500 million.
The Environmental Impact Statement for the pipeline is expected to be submitted by the end of June, with expressions of interest for pipe supply and construction called for by the end of August. A FID on the pipeline is expected by February 2010.
The company has said that by 2012, it will have enough proved and probable reserves to supply a potential
3 MMt/a LNG train, and then further sufficient reserves for new 3 MMt/a trains every four years thereafter.
Australian Pacific LNG Project
Joint venture partners Origin and ConocoPhillips are developing the Australian Pacific LNG Project, which will utilise Origin’s Queensland CSG reserves and resources. A pipeline will be constructed to link the company’s tenements with the Gladstone LNG plant. The project will have up to four trains, with a total capacity of 14-16 MMt/a of LNG. A work program involving upstream planning and appraisal, FEED, LNG site selection, marketing and project approvals has commenced.
EWC CSG to LNG Project
Energy World Corporation (EWC) has outlined plans to build a pipeline to connect Abbot and Hay points to the Bowen Basin, and eventually to the Cooper Basin. A spur gas pipeline could also be added to collect gas from the Surat Basin.
The pipeline would be part of a project involving 1-5 MMt/a LNG plants at Abbot Point and Hay Point to exploit gas reserves located in ATP 549 and the Gilmore Gas Field in petroleum licence
65 in the Eromanga Basin. The target date for LNG productions from the facilities is 2012, or earlier if the required licences and permits can be obtained on a priority basis.
Southern Cross LNG Project
Canadian-based LNG Impel has said that it is continuing discussions with interested producers and gas suppliers for its proposed $3-5 billion Southern Cross LNG Project. The project is set to move toward commencing environmental permits once gas supply arrangements have been finalised. LNG Impel is yet to release the number of LNG trains to be developed or capacity of the LNG plant. A pipeline component for the project is yet to be announced.
Existing pipeline expansions
In order to service the expanding CSG industry in Queensland and the potential CSG to LNG projects, Jemena is expanding the capacity of its 627 km Queensland Gas Pipeline (QGP). The company has said that the expansion of the QGP will offer an alternative to individual pipeline development for companies currently with interests in the Gladstone CSG to LNG projects.
The pipeline’s capacity is being expanded to 49 PJ/a through the addition of compression at Rolleston and Banana, and 113 km looping from Moura to Bell Creek. The first stage of the expansion is due for completion early in 2010, with looping contractor AJ Lucas and compressor station contractor Enerflex having commenced construction works.
The QGP transports gas from the Surat and Cooper basins, the Denison Trough and the southern Bowen Basin to markets in Gladstone and Rockhampton. The pipeline links with the Roma to Brisbane Pipeline and the SWQP at Wallumbilla, providing access to CSG fields around Fairview, Spring Gully and Moura.
Government initiatives
The Queensland Government is fostering an environment conducive to bringing these projects to fruition, including the acquisition of land for the extension of the Gladstone State Development Area (GSDA).
Queensland Department of Infrastructure and Planning Executive Director of LNG Mal Hellmuth says “We’ve put in place infrastructure planning; we have some corridors through the GSDA to accommodate pipelines.
“We’ve done work on the best options from using road to sea transport to access the plants; and we’ve gone to the broader corridors, such as the corridor from Gladstone to the Surat, to look at how those corridors could be best set up to service the industry.”
The Queensland Government has also said that it will build a “˜gas superhighway’ from the Callide Range through to Gladstone, which would mean that the Government would acquire the land necessary for pipelines for the LNG industry in the future, simplifying the activity that companies would have to undertake for project development.
New South Wales
Several CSG fields located in New South Wales are currently being
developed, with proponents considering pipeline infrastructure to reach the New South Wales gas market. While not as large as the Queensland industry, New South Wales CSG is looking extremely promising.
In addition, proposals to connect the gas markets between Queensland and New South Wales are continuing, with further plans in the pipeline.
Queensland Hunter Gas Pipeline
Plans for the proposed 820 km Queensland Hunter Gas Pipeline (QHGP) which is set to deliver CSG collected in southern central Queensland fields to Newcastle in New South Wales, progressed throughout the year. The project’s proponent, Queensland Hunter Gas Pipeline Pty Ltd, awarded a FEED contract to URS in May 2008.
It was originally planned that the pipeline would transport 50 PJ/a of gas for 20 years for a 400-600 MW power station proposed by QGC, ANZ Infrastructure Services and Toyota Tsusho Corporation that was to be located at Chinchilla. The gas supply equated to one third of the pipeline’s ultimate capacity and involved the construction of a 120 km offshoot pipeline to connect to QGC’s Berwyndale South Gas Field.
The agreement fell through, following QGC’s takeover by BG, and QHGP Pty Ltd is now talking to a number of potential customers regarding gas contract sales. A Memorandum of Understanding (MoU) has been signed with an unnamed company and QHGP Pty Ltd is looking toward contracts for the pipeline. Construction of the pipeline is anticipated to start late 2010-11 with first gas expected in the first quarter of 2012.
Lions Way Pipeline
Metgasco’s 145 km high pressure Lionsway Pipeline is being developed to supply gas from the company’s CSG project in the Clarence Moreton Basin, New South Wales, to the South East Queensland energy market. Environmental assessment and development approval for the Lionsway Pipeline has been undertaken and construction for the pipeline is expected to commence in 2010 and to finish in 2011.
Metgasco also entered into a MoU with BP Australia to conduct feasibility studies for the extension of the pipeline to BP’s refinery facilities at the Port of Brisbane.
Narrabri CSG Project
As part of its Narrabri CSG Project, located in the Gunnedah Basin, Eastern Star Gas (ESG) is currently constructing and proposing a number of pipeline developments.
A 250 mm diameter, 33 km flowline to transport gas produced from the Bibblewindi area to the Wilga Park Power Station is currently being completed at the field.
ESG also has a Heads of Agreement in place with APA Group regarding a new gas pipeline that could be built and connected to the Central West Pipeline for CSG delivery from the Narrabri area the New South Wales gas market.
The company has outlined possible development plans for the CSG field beyond domestic gas supply, including gas-to-liquids, ammonium-nitrate plants and LNG.
ESG has entered into discussions with the Newcastle Port Corporation to build an LNG plant at the port, stating that Newcastle is a logical location for a potential LNG plant as it is already a thriving export centre, has room for additional vessels, and is in close proximity to the Narrabri CSG Project.
Wellington Power Station
In March this year, ERM Power was granted final approval to build a
$700 million, 640 MW gas-fired power station in central western New South Wales.
The power station is to be located in Wellington, 50 km south of Dubbo, and will involve the development of a 100 km pipeline to connect the power station to APA’s Central West Pipeline near Alectown.
Construction is expected to begin mid-2009, with the power station due to come online in 2011-12.
ESG Chief Commercial Officer Roland Sleeman has said that the power station will be located in close proximity to the Narrabri field, the gas supply options/opportunities of which are not lost on the company.
Gloucester Basin CSG Project
AGL Energy is planning a pipeline as part of its Gloucester Basin CSG Project, located approximately 100 km north of Newcastle. The Stratford to Hexham Pipeline will be approximately 10-18 inches in diameter and around 95 km long. First gas is expected to arrive in Hexham via the pipeline in the third quarter of 2010.
AGL is currently preparing submissions for approvals regarding a corridor for the pipeline and a processing facility.
Hunter and Camden gas projects
AGL has outlined plans to supply the New South Wales gas market with 10-15 PJ/a of gas from the Camden field and 15-20 PJ/a of gas from the Hunter field by 2015. The company is currently completing drilling within the fields.
Camden is located 50 km southwest of Sydney, while Hunter is situated near Newcastle.
Newstead to Bulla Park Pipeline
APA Group has mooted a 645 km high pressure gas pipeline to connect the Wallumbilla gas hub in Queensland, with the Moomba to Sydney Pipeline at Bulla Park. Approximately 350 km of the pipeline is set to be located in New South Wales.
APA lodged the project for major project status with the New South Wales Government in April this year and has completed preliminary environmental assessments.
The company has said that as further gas resources are discovered in southern Queensland, a proportion of New South Wales’ future gas supply is expected to be sourced from there. The pipeline will ensure that gas infrastructure is in place in time for the increased demand for gas use by industry and power generation as Australia moves toward a cleaner energy economy.
Other states
Exploration for CSG is also occurring in Western Australia, Northern Territory and Tasmania. Current operations in the other states involve test drilling activities, with any supporting infrastructure to be proposed once reserves have been proven.
Conclusion
There has been phenomenal pipeline activity surrounding the CSG industry over the last year.
In Queensland, the completion of the QSN Link and Berwyndale to Wallumbilla pipelines have allowed CSG to be delivered into the eastern Australian gas grid to supply the New South Wales and potentially Victorian gas markets.
The recently completed Wallumbilla to Darling Downs and Braemar 2 pipelines are set to transport CSG for power generation within the state, providing an additional 1,080 MW of combined gas generation to the state.
Queensland Minister for Natural Resources, Mines and Energy Stephen Robertson has said that South East Queensland CSG reserves are “virtually inexhaustible” – and with the many proposed CSG to LNG export projects, it would appear that the international market thinks this as well.
In addition, proposals to develop CSG to LNG projects at the Newcastle Port could see the New South Wales CSG industry break into the international market.
The Australian CSG industry is powering full steam ahead. The continued growth of CSG exploration throughout Australia will mean that further pipeline infrastructure will be needed to transport new reserves well into the future.
How much LNG?
While there are abundant CSG resource in Queensland to support multiple CSG to LNG projects, it is unlikely that all seven Gladstone LNG projects will come to fruition.
Queensland Department of Infrastructure and Planning Executive Director of LNG Mal Hellmuth has commented that “What we’re seeing in Gladstone is the possibility of around 14 LNG trains of varying sizes.
“At present, if we look at what many industry groups are saying, perhaps between 10 and 15 MMt/a would be ideal. If that would happen, that equates to about 3-5 trains. That would be a starting point for Queensland.”
Companies involved in the various projects such as Santos, Arrow and Origin have said that it is likely collaboration will occur in regard to the projects in order to create greater economies of scale.
Company consolidation has already occurred surrounding those involved in the state’s CSG sector. Sunshine Gas’ Project SUN LNG, a joint venture with Sojitz Corporation, has folded following QGC’s subsequent takeover of the company. QGC was then taken over by BG Group and the reserves for Project SUN LNG are now going toward the BG/QGC Curtis LNG Project.