Petroleum exploration and development during the past year reached record levels with a total of over 670 wells drilled – the largest number of petroleum wells ever completed in Queensland in a 12 month period. This was made up of approximately 600 CSG wells and 70 conventional petroleum wells and compares to a total of 563 wells drilled in 2006-07, 392 of which were CSG wells and 171 conventional wells.
The increased level of petroleum exploration heralds the need for the expansion of old and development of new infrastructure within the state. Here, The Australian Pipeliner looks at how pipeline infrastructure has previously been developed in Queensland and how it may develop in the future.
Nation firsts in the pipeline
A number of pipeline firsts have occurred within Queensland.
Constructed by Union Oil in 1963, the 306 km Moonie to Brisbane Oil Pipeline was the first pipeline project in Australia to use the modern day “˜mass production’ construction techniques. Santos now owns the pipeline and ceased operation of the pipeline in 2008.
In 1961, natural gas was connected to the old Roma Power Station, marking Australia’s entry into commercial natural gas projects. The completion of the Roma to Brisbane Pipeline in 1969 marked Australia’s first high pressure natural gas pipeline.
The 435 km, 270-320 mm diameter mainline has 126 km of gathering lines from 50-270 mm in diameter and five line stations. The route ran from Darling Downs to metropolitan Brisbane. Today the pipeline has been looped from Roma to Ellengrove and six compressor stations have been added to the line. APA is currently undertaking FEED for additional expansion of the pipeline, which is being considered through either additional compression or looping.
Changes to existing pipelines
The 627 km Queensland Gas Pipeline, then known as the State Gas Pipeline, was constructed in 1989 to transport gas from the Surat and Cooper Basins, the Denison Trough and the southern Bowen Basin to markets in Gladstone and Rockhampton.
Jemena has announced that it will expand the capacity of the Queensland Gas Pipeline via compression at Rolleston and Banana and looping between Moura and Bell Creek. AJ Lucas has been named construction contractor for the looping project after a detailed tendering process. Stage 1 of the expansion project is due for completion in early 2010.
The 840 km APA-owned Carpentaria Pipeline transports gas from Ballera in southwest Queensland to the WMC fertiliser plant at Phosphate Hill, the BHP mine at Cannington (via the 110 km Cannington Lateral Pipeline) and the Mica Creek Power Station in Mt Isa. The first stage of a capacity expansion occurred in December 2002, with the addition of a 1 MW compressor at Morney Tank.
In 2008, APA announced that it plans to expand the Carpentaria Gas Pipeline, which will involve an additional compressor station at Davenport Downs, and increasing the pipeline’s capacity by 15 per cent.
The 392 km North Queensland Gas Pipeline, originally owned by Enertrade, was commissioned in 2004. The pipeline provided a link for the transportation of CSG from Moranbah to the Yabulu Power Station in Townsville and provides a strategic link between the north Bowen Basin and Townsville. In the last two years the pipeline has gone through several ownership changes. Arrow Energy and AGL Energy acquired Enetrade’s pipeline business in 2007 and in August of 2008, Arrow and AGL confirmed the completion of the $205 million sale of the North Queensland Gas Pipeline to Victorian Funds Management Corporation.
Present: gas is the go
The past year has seen the gas industry in Queensland grow to the point where EnergyQuest Chief Executive Officer Graeme Bethune has commented that the state looks set to join Western Australia and the Northern Territory as an important LNG exporter.
“In less than five years the east coast has gone from facing a looming gas shortage to having more than enough gas to meet local demand and export overseas,” he said.
The Queensland Government is encouraging the development of gas within the state, passing the Clean Energy Bill in May this year. The Bill outlines legislation that will increase the state’s Gas Scheme Target, requiring electricity retailers to purchase 15 per cent of their electricity supplies from gas-fired generation sources.
The Government also plans to increase the gas target to 18 per cent by 2020.
“Gas is a vital path to a cleaner energy future and it’s in abundance in the Surat Basin,” said Queensland Minister for Mines and Energy Geoff Wilson.
CSG: firing up the gas industry
CSG supplies approximately 70 per cent of the gas market in Queensland, and Mr Wilson has said that the gas source is well placed to become an important source of gas for the rest of eastern Australia.
From 2006-07 production of CSG had grown from 86 PJ to 125 PJ in 2007-08.
In 2008, Arrow Energy and ERM Power executed a Partnership Agreement to jointly develop the estimated $545 million, 450 MW Braemar 2 Power Station and associated 107 km pipeline, located in the south of the state. Delco has begun to construct the 16 inch, Class 900 gas pipeline with the project scheduled for completion in early 2009.
This is in addition to the 450 MW Braemar 1 Power Station, which completed construction in 2007. As part of the project, a 16 inch pipeline measuring approximately 115 km was built between Condamine and Dalby to deliver gas to the plant.
Arrow is continuing to develop the 440 km Central Queensland Gas Pipeline (CQGP) with joint venture partner AGL Energy. The $475 million pipeline will form a key link in delivering CSG from the Moranbah Gas Processing Plant to Gladstone where it will connect into the pipeline grid. In September, the Queensland Government awarded the joint venture a 45 year point-to-point gas pipeline licence, for the development of the pipeline.
The state Government has also declared a 90 km infrastructure corridor from Stanwell to Gladstone a State Development Area, enabling construction of major water, gas and slurry pipelines. The proposed Stanwell to Gladstone Infrastructure Corridor will be typically 100 m wide, but up to 500 m across in sections where construction is complex. It is expected that the CQGP will run through this corridor.
October saw Arrow call for Expressions of Interest for the design and construction of the pipeline with the goal of determining two tenderers that will compete in a competitive tender process.
In addition, Queensland Gas Company (QGC) and AGL reached an agreement to develop a 113 km long,
400 mm diameter high pressure steel pipeline to transport gas from the planned Condamine Power Station, located east of Miles, to the Wallumbilla gas hub. The Berwyndale to Wallumbilla Pipeline will provide increased capacity for the transport of QGC’s gas into western Queensland and, ultimately, the southern states. In August, Diversified Construction Corporation and WorleyParsons executed a Professional Services Agreement encompassing engineering, design and construction planning for the pipeline. Diversified began construction in October with completion expected early this year.
In the same month Nacap began construction activities on Origin Energy’s Wallumbilla to Darling Downs Pipeline, which forms part of the expansion of its Spring Gully CSG Field in the Surat Basin. The $90 million, 200 km pipeline is set to run between the gas hub at Wallumbilla to the Talinga field and the proposed Darling Downs Power Station. Construction is expected to be complete early this year.
Origin’s Darling Downs Power Station will have a capacity of 630 MW and will take advantage of Origin’s CSG reserves predominantly in the area around Roma and Chinchilla.
CSG to LNG: transforming the east coast
International interest in Queensland’s gas reserves has been phenomenal over the past year, with major overseas companies acquiring interests in east coast CSG to LNG projects.
In February 2008, QGC signed an agreement to establish an alliance with BG Group to co-operate in the exploration and development of QGC’s CSG reserves for the Queensland Curtis LNG Project. The $12-14 billion project will include a 380 km pipeline from QGC’s Surat Basin tenements to a port site and construction of a world scale LNG plant.
In July, Bechtel Oil, Gas and Chemical was secured as project contractor and the FEED study commenced immediately. Procurement and construction is planned to follow a final investment decision (FID) on the project, scheduled for early 2010.
Santos and Petronas have agreed to jointly develop the Gladstone LNG Project (GLNG). The project comprises a 3-4 MMt/a LNG processing train and associated infrastructure, including the construction of a 450 km pipeline linking a compressor station to the liquefaction plant.
The projected total cost of the project is between $5-7 billion. LNG will be sold to Petronas’ customer base in Japan, Korea and Taiwan.
In April, Santos awarded two parallel FEED contracts to Foster Wheeler and Bechtel to each undertake a six month study of the project. December 2008 saw Bechtel awarded the downstream FEED contract, which is to start early this year. A FID is expected by the end of 2009, and first LNG cargoes early in 2014.
LNG Ltd has proposed the Gladstone “˜Fishermans 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 the availability of additional gas. The plant will source gas from Arrow Energy’s Moranbah Gas Processing Plant via Arrow and AGL’s proposed CQGP.
In addition, to proposing the development of the CQGP, Arrow is investigating an option for developing a 400 – 500 km pipeline from its Surat Basin tenements to Gladstone, as part of its CSG to LNG project with Shell. The pipeline would require an investment of approximately $500 million.
Origin selected ConocoPhillips to acquire a 50 per cent share in a CSG to LNG joint venture – Australia Pacific LNG – for approximately $9.6 billion. The joint venture will involve the development of a four train LNG project utilising Origin’s Queensland CSG reserves and resources. The project is set to commence FEED this year, with immediate priorities including site selection, pipeline routing and reserves maturation. Following this, a FID is expected for the project’s first LNG train in late 2010, with the possibility of simultaneous FID on the second train.
Energy World Corporation (EWC) has plans to establish 1 – 5 MMt/a LNG plants in Queensland at Abbot Point and Hay Point to exploit gas reserves located in ATP 549 and the Gilmore Gas Filed in PL 65 in the Eromanga Basin.
EWC said that a pipeline will be built to connect Abbot Point and Hay Point to the Bowen Basin and eventually through to the Cooper Basin. A spur gas pipeline can also be added to collect gas from the Surat 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.
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 towards commencing environmental permits once certain volumes of gas have been finalised. A pipeline component for the project is yet to be announced.
Linking the states
Nacap Australia recently completed construction on Epic Energy’s 180 km Queensland to South Australia/New South Wales (QSN) Link, which extended Epic’s South West Queensland Pipeline (SWQP) and is designed to transport up to 250 TJ/d when fully compressed. The pipeline completes the final link between the Queensland, South Australia and New South Wales gas markets. The project also includes compression and a start of line station at Wallumbilla.
In December 2007, AGL Energy exercised an option with Epic for the Stage 2 Expansion of the SWQP, which will require the installation of a further two compressor stations on the SWQP, due on line no later than January 2013. Epic expects to invest approximately $64 million on additional compression required for the Stage 2 expansion, with the final capital investment to be determined by a separate detailed FEED study.
Epic is also undertaking a FEED study into the Stage 3 expansion of the SWQP. The FEED study will investigate the feasibility of further expanding the SWQP through either full compression or by looping, following significant interest from shippers and is expected to be completed by the end of this year. Epic has also commenced the process of obtaining necessary approvals to construct the Stage 3 expansion and has said it will investigate potential financing options.
APA Group has considered the possibility of transporting CSG from Queensland’s gas fields to New South Wales, via the QSN Link to Moomba and then down the Moomba to Sydney Pipeline.
The proposed 820 km Queensland Hunter Gas Pipeline (QHGP), set to deliver CSG collected in southern central Queensland fields to Newcastle in New South Wales, progressed well throughout the year. The project’s proponent, Queensland Hunter Gas Pipeline Pty Ltd, awarded a FEED contract to URS in May. In June, an agreement was reached to 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 and to be located at Chinchilla. This equates to one third of the pipeline’s ultimate capacity and involves the construction of a 120 km offshoot pipeline to connect to QGC’s Berwyndale South Gas Field. Construction of the pipeline is anticipated to start late 2009 with first gas expected in the first quarter of 2011.
At the time of writing, Queensland Hunter Gas Pipeline Pty Ltd had narrowed the tendering process down to two companies for the detailed engineering contracts.
In addition, Metgasco’s 145 km high pressure Lionsway Pipeline is being developed to supply gas from its 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 was undertaken in March and construction for the pipeline is expected to commence in 2010 and finish in 2011.
Metgasco also entered into a Memorandum of Understanding with BP Australia to conduct feasibility studies for the extension of the pipeline to BP’s refinery facilities at the Port of Brisbane.
Wetting QLD’s whistle
A number of projects have been completed or are in development that will ensure that Queensland’s scarce water resources will be distributed throughout the state.
The Western Corridor Recycled Water (WCRW) Project, which includes a 200 km pipeline, has reached completion with the capacity to produce up to 232 ML/d of water. Purified water from the Bundamba Advanced Water Treatment Plant is now being pumped to the Swanbank Power Station near Ipswich, and the Tarong Power Station, located 195 km northwest of Brisbane. A workforce of 1,000 people completed the final stage of the project focused on the Luggage Point and Gibson Island advanced water treatment plants. (See page 128 for more details).
The Southern Regional Water Pipeline (SRWP) has also completed construction. The $901 million project links the Mt Crosby Treatment Plant to Molendinar on the Gold Coast and includes five pump stations, four reservoirs and 11 tunnels. The project was constructed by the SRWP Alliance involving Abigroup, McConnell Dowell and KBR.
The SRWP project also included the construction of the Northern Pipeline Interconnector and the Eastern Pipeline Interconnector. The Northern pipeline runs for 47 km between Landers Shute Water Treatment Plant, Landsborough and Morayfield Reservoir, Caboolture, with the capacity to deliver up to 65 ML/d. The 8.6 km eastern section links Heinemann Road Reservoir, Redland and Kimberley Park Reservoir, Logan, and has a water movement capacity of up to 22 ML/d. (See page 121 for more details).
The federal Government has said that it will commit $20 million to the Gladstone to Fitzroy Pipeline. The construction of the pipeline was awarded to a joint venture between Clough, Diversified and United Infrastructure. The 115 km pipeline will run between the Fitzroy River and Gladstone via the proposed Stanwell to Gladstone Infrastructure Corridor.
March saw Diversified selected as preferred proponent for the $200 million Wivenhoe to Cressbrook Pipeline Project, located in Esk Shire. The project involves the design and construction of a 27 ML/d water pump station and 37 km of buried pipeline between Wivenhoe Dam and Cressbrook Dam, and is part of the South East Queensland Water Grid.
The Queensland Government also said that it will build a $187 million, 40 km pipeline to pump water to Toowoomba from the Wivenhoe Dam. Construction of the pipeline will be completed by an alliance between Clough, Diversified and Maunsell.
In addition, the Rockhampton Regional Council is constructing a pipeline to run from Rockhampton to the Capricorn Coast. The project will secure water supplies for the Capricorn Coast communities via the construction of two pipelines: a 34 km pipeline of 600 mm in diameter and a 12 km pipeline of 750 mm diameter.
Construction began in April 2008 with the project scheduled for completion in November 2009.
SunWater and the state Government also committed $3 million for a feasibility study into a 130 km water pipeline from Burdekin River to Bowen. If approved, the pipeline will pipe more than 60,000 ML of water into the Bowen region from the Burdekin Falls River.
In December, the Queensland Government approved the construction of a 38 km pipeline to pump water to the township of Cloncurry from the Ernest Henry Mine in the state’s northwest.
The $42.5 million pipeline will be capable of delivering up to 1,500 ML of water into the town’s storage each year. SunWater has begun preliminary works to ensure the earliest possible water delivery, expected between July and September this year.
Bright future for QLD
The continued growth of petroleum exploration in Queensland, particularly in relation to CSG, will mean that further pipeline infrastructure will be needed to transport new reserves. Not only will this infrastructure be needed to carry gas to markets in Queensland, but the continued development of additional reserves substantiates the state’s ability to supply the rest of the east coast.
Pipeline development around the Wallumbilla and Berwyndale areas in the south of Queensland has flourished, with the Wallumbilla to Darling Downs Pipeline and Berwyndale to Wallumbilla Pipeline commencing construction, while proposed pipelines, such as the Queensland Hunter Gas Pipeline, are planned to run from the area in the future.
The large number of CSG to LNG projects that are proposed to be developed at Gladstone is again testament to the large amount of reserves available in the sunshine state, however it is unlikely that all of these projects will come to fruition. The last half of 2008 saw a number of takeovers of companies with interests in CSG to LNG projects and if this continues the number of LNG developments may dwindle, however even a couple of the LNG facilities would require the development of a large amount of infrastructure. The proposed projects are expected to reach FIDs between 2009 and 2010 and the industry will wait with baited breath to see which projects go ahead.
The completion of large water projects such as the SRWP and the WCRW Project has meant that water is now available to dry areas of the state. While recent rains have lessened the urgency for water projects in Queensland, water pipelines will continue to be an important feature of infrastructure development as the state aims to provide a stable water supply for dryer areas. In addition, the potential for using water by-product from CSG fields may also see new pipeline developments in Queensland’s future.
PNG to Queensland Gas Pipeline
The Papua New Guinea to Queensland Pipeline was previously seen as a way to get gas into Queensland. The development of CSG resources within the state and the alternative PNG LNG Project, has seen the project sidelined.
ExxonMobil’s estimated $7 billion PNG to Queensland Pipeline was set to deliver dry gas from the PNG Gas Project in the country’s southern highlands, over 3,200 km to customers in Australia. The pipeline was to run from the Kutubu oil and gas fields to the south coast of PNG, where a marine terminal facility in the Gulf of Papua would produce natural gas and liquefied petroleum gas for PNG and export markets. The development also involved a 165 km pipeline across Torres Strait and down Cape York, which would have transported natural gas to Brisbane and a lateral pipeline linking Townsville and Ballera.
Company consolidation surrounding CSG to LNG
Earlier last year, BG Group attempted to take over Origin Energy, with an interest to develop a CSG to LNG project. BG withdrew its takeover bid after Origin signed a deal with ConocoPhillips for the development of such a project in September.
Since then, BG has taken over its joint venture partner in the Queensland Curtis LNG Project, QGC.
In turn, QGC has acquired Sunshine Gas after Sunshine said it was suring up CSG reserves for the development of a CSG to LNG project.
In July 2008, the Queensland Government received a $5 million grant for a feasibility study into the use of water produced from CSG extraction.
A number of companies have also expressed interest in using the water by-product from their CSG activities.
Arrow Energy has committed to utilising by-water from its Surat Basin CSG operations to secure water for the town of Dalby. The company’s Surat Basin operations currently produce around 13 ML/d of CSG water but this figure is expected to peak at over 150 ML/d over the next few years.
Origin Energy has said that it is exploring ways of optimising the commercial and beneficial uses of water produced and treated from its CSG operations in southwest Queensland. The company is considering industrial, agricultural or the supplementation of town supplies, for water treated at its 9 ML facility near Roma.
QGC has agreed to supply the Murilla Shire Council with the supply of more than half a billion litres of potable water each year to the town of Miles in southern Queensland. The water, produced at QGC’s CSG extraction business in the Surat Basin, will supply the town for 20 years.
Oil and slurry
Diversified Construction Corporation completed construction at Santos’ 273 km Jackson to Moomba Oil Pipeline in July 2008. The 8 inch pipeline will transport oil from the Jackson plant to the Moomba plant in the Cooper Basin.
In June, the route selection for the Gladstone Nickel Slurry and Water Pipeline was finalised by Gladstone Pacific Nickel. The company said that it will use the upgraded Government Pipeline Corridor from Yarwun to its Residue Storage Facility. This means that the pipeline will follow a similar route to that used by Rio Tinto for its Yarwun Alumina Refinery pipeline.