Mining for opportunities: pipeline construction in WA

Western Australia is the largest gas producing state in Australia, with the majority of Australian conventional gas resources located on the North West Shelf. Despite current gas development in the east, WA is expected
to hold the mantel of largest gas-producing state over the next four decades.

The Bureau of Resources and Energy Economics (BREE) has projected that WA gas production, including LNG, will rise by 2.2 per cent per annum from 1,777 PJ in 2012-13 to 2,036 PJ in 2049-50, driven by a strong domestic and global demand for gas.

Over the next three years a number of large gas projects are expected to come online including the 15 MMt/a Gorgon Project (Australia’s largest CAPEX gas project at $43 billion), the 8.9 MMt/a Wheatstone Project, the Macedon Gas Field Development, and the Prelude Floating LNG Project.

Currently, the following pipeline infrastructure is under construction for these projects:

  • 90 km Gorgon Domgas Pipeline, which includes a 59.4 km offshore section from the LNG Jetty on the east coast of Barrow Island, to the Australian mainland shore crossing; a 12 km intertidal pipeline section from the mainland shore-crossing to the High Water Mark; and a 19.8 km onshore pipeline section to the Dampier to Bunbury Natural Gas Pipeline (DBNGP) south of Compressor 1;
  • 70 km Wheatstone Domgas Pipeline, which will connect the Wheatstone Domgas/LNG plant, located at North Ashburton to the DBNGP;
  • 90.5 km Macedon wet gas pipeline, which will connect to an onshore gas treatment plant at Ashburton North, and a 67 km sales gas pipeline which will interconnect with the DBNGP.

The mining industry represents another key driver for gas production in WA. New mining projects often require pipeline infrastructure to connect their site to a reliable supply of gas.

The WA Department of Mines and Petroleum reported that the state’s mining industry investment activity in 2012 was $51 billion, a 45 per cent increase on 2011. The Department states that new capital expenditure by WA’s mining industry has grown at an annual rate of 27 per cent from 2008-12, fuelled by a strong demand for resources from Asia.

Pipeline infrastructure currently under construction for mining sites includes:

  • 85 km, 400 mm diameter West Angelas Gas Pipeline for Rio Tinto, which will connect the company’s iron ore expansion projects to the Goldfields Gas Pipeline; and,
  • 2 km, 250 mm Cape Lambert Gas Pipeline Extension for Rio Tinto that will connect to a new power station.

Mining for the future

Several slurry pipeline projects have been proposed as part of new mining developments, particularly in the magnetite sector. These include:

  • 278 km, 500 mm diameter Extension Hill slurry pipeline which will transport magnetite from the Extension Hill mine to Geraldton Port, a 280 km, 450 mm diameter return water pipeline, and a 38 km fresh water pipeline. A 220 km, 250 mm gas pipeline is also proposed to connect the site to the DBNGP;
  • 100 km Southdown Magnetite and Kamaman Pellet Project slurry pipeline, which will transport mine waste from the mine site 90 km northeast of Albany to the Port of Albany. A return water pipeline will also be constructed; and,
  • 110 km, 457 mm diameter Balla Balla mine slurry pipeline from Aurox Resources’ mine site to Port Headland.

Aside from the slurry sector, Gunson Resources has proposed a 200 km lateral pipeline running off the DBNGP, which is set to run from the mainline to a proposed gas-fired power station at Coburn. FEED studies have been undertaken on the pipeline, yet a construction date is yet to be announced.

Rising building and operational costs have presented a challenge for the mining industry – with particular reference to magnetite projects. This has seen many sites with slurry pipeline components put on hold.

Pipeline engineering company OSD has a slurry pipelines division to service the mining industry. Executive Director Keith Horstmann says “The magnetite industry has for several reasons failed to develop as expected. As a consequence the proposed hydro-transport systems for Extension Hill, Southdown and Balla Balla are all still on the drawing board pending funding of the projects. The magnetite slurry pipeline at Cape Preston has been completed but the overall Sino Iron Project is still in the commissioning phase. If the project starts to produce as planned it is expected that funding for these other projects may became easier.”

Looking ahead

The WA Department of Mines and Petroleum has stated that “While the recent falls in commodity prices have caused some mining companies to re-evaluate their investment positions, a review in March – April 2013 showed that WA still has an estimated $177 billion worth of resource projects under consideration or in the committed stage of development.

“A further $120 billion has been identified as planned or possible projects in coming years.”

Mr Horstmann says “There are literally dozens of pipelines under consideration for development, mostly associated with proposed new or upgraded mining operations. There will also be numerous pipelines associated with the development of unconventional oil and gas deposits in the Canning, Onshore Carnarvon and Perth basins.”

The most significant WA pipeline infrastructure proposals include:

  • 800 km Great Northern Pipeline linking the Canning Basin to the DBNGP or the Pilbara Energy Pipeline;
  • 400 km Bunbury Albany Gas Pipeline, which will be an extension of the DBNGP to service the Bridgetown, Manjimup and Albany areas; and,
  • 300 km Central Pilbara Pipeline, which is planned to service Fortescue Mining and/or Roy Hill Developments mining sites.

The proposal of new mining projects and expansion of existing also necessitates capacity increases on existing pipeline infrastructure.

“Within 10 years the DBNGP will need to be fully looped and the Goldfields Gas Pipeline will also need to be looped at the top end to supply the ever-growing energy requirements of the Pilbara mining industry,” says Mr Horstmann.

“The further expansion of existing pipelines or development of new pipelines is dependent upon the rate of development of the mining industry. Historically this has been very much a cyclic industry led by global commodity prices, so it is impossible to forecast requirements with any certainty. Higher commodity prices will lead to more mining that will require more energy and therefore more end-user pipelines.

“This in turn will drive more oil and gas development with associated supply pipelines to existing infrastructure that will need expansion. As has happened over the last few years, this will happen again in the future, but it is difficult to pinpoint when,” Mr Horstmann explains.

Challenges and opportunities

Mr Horstmann outlines the greatest challenges for future pipeline construction in WA will arise from rising labour costs, the availability of experienced resources, more competitive CNG and LNG solutions for smaller users, and when considering the commercialisation of offshore reserves for export – floating LNG solutions.

“In the shorter term, the impact of fluctuating commodity prices for the mining industry will pose a challenge for the approval of pipeline projects. As a source of energy for these projects, a pipeline cannot be turned on and off in the same manner as trucked diesel.”

While this presents a short-term challenge, Mr Horstmann outlines that providing more effective techno-commercial solutions that better suit the mining industry is an exciting opportunity for pipeliners.

“Connecting the Canning Basin to the domestic gas network and opening up the Pilbara region to gas-fired power generation present exciting prospects for the pipeline industry.”

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