Following on from the success of its Wheatstone Ashburton West Pipeline agreement struck with Chevron Australia in 2013, DBP Development Group (DDG) announced in January 2014 that it had formed a joint venture (JV) with TransAlta’s wholly-owned subsidiary TEC Pilbara to build, own and operate a natural gas transmission pipeline, the Fortescue River Gas Pipeline (FRGP).
DDG holds a 57 per cent interest in the JV and TransAlta holds 43 per cent.
In February 2014, DUET completed a fully underwritten placement to raise approximately $A100 million to fund the pipeline. Sub 161⁰, an Australian-owned virtual pipeline company, signed a gas supply agreement with FMG Solomon, a wholly-owned subsidiary of Fortescue Metals Group, for the take-or-pay obligation to supply 11 TJ/d of natural gas to the company’s Solomon Hub in Western Australia.
A record breaking pipeline
The project involves the construction of a 270 km, 406.4 mm pipeline connecting the Dampier Bunbury Natural Gas Pipeline to TransAlta’s 125 MW power station, situated at Fortescue Metals Group’s Solomon Hub iron ore operations in Western Australia’s Pilbara region.
The pipeline will supply natural gas to the 125 MW TransAlta power station, which services Fortescue’s mining operations in the region, and will be the longest built in Western Australia in the past ten years, with an initial free-flow capacity of 64 TJ/d.
An initial 20-year, 100 per cent take-or-pay gas transportation contract has been executed between the joint venture and FMG Pilbara, a wholly-owned subsidiary of Fortescue, as the foundation shipper on the Fortescue River Gas Pipeline.
Projected total cost for the project is $A182 million.
Construction
Monadelphous Group has been awarded the construction contract for the pipeline, valued at approximately $A100 million, which in turn is expected to save Fortescue approximately $A22.4 million per year.
In September 2014, DDG signalled the possible expansion of the pipeline to additional iron ore resource projects in the future, following a presentation made by Fortescue Metals Group at the 2014 Diggers and Dealers Mining Forum.
As at December 2014, construction was underway at multiple sites, with the Solomon Hub meter station now complete. Meanwhile, the expected completion date for the pipeline has been pushed back from December 2014 to the first quarter of the 2014–15 financial year.
Creating jobs
DBP Chief Executive Officer Stuart Johnston said the project would see up to 200 new local jobs created during construction, including involvement from local indigenous communities and over 70 per cent of the project costs spent in Australia.
This article was featured in the February 2015 edition of The Australian Pipeliner.
If you have news you would like featured in The Australian Pipeliner contact Managing Editor David Convery at dconvery@gs-press.com.au
