Victorian pipeline development and the natural gas industry

The pipeline industry in Victoria continues to push forward, with a number of projects under construction or set for completion this year.

Alongside pipeline construction, the state’s moratorium on all onshore gas activities has caused industry representatives to call for the latest governmental inquiry to provide certainty for the industry.

Policy update: Victorian natural gas exploration and production

The Australian Pipelines and Gas Association (APGA) has called for the latest inquiry into the exploration and production of natural gas in Victoria to finally settle the issue of the value of natural gas for Victorians.

In May, the Andrews Labor Government announced it had asked the Environment and Planning Committee to inquire into the exploration, extraction, production, and rehabilitation for onshore unconventional gas, as part of the Government’s election promise.

A moratorium has been in place since August 2012 and will remain for all onshore gas activities including exploration, drilling, and hydraulic fracturing until the inquiry reports to Parliament.

The inquiry will provide its final report by 1 December 2015.

In response to Victorian Energy Minister the Hon. Lily D’Ambrosio’s announcement on the new inquiry, APGA Chief Executive Cheryl Cartwright said “A moratorium on all onshore gas activities is not good for investment or for energy supplies in Victoria.

“The independent scientific reviews already conducted have shown that, with appropriate safety measures and regulation, CSG extraction can be achieved safely and efficiently, and provide benefits to local communities,” said Ms Cartwright.

“Furthermore, natural gas has half the emissions of coal-fired power and that’s what we should be using as the back-up fuel for renewable energy generation and as the transitional fuel as the nation moves towards increased renewable energy.

“We encourage the Government’s latest review to fully consider the independent science on CSG development and also consider the carbon emissions consequences of ignoring the benefits of natural gas.”

Elsewhere, speaking at the Energy Networks Association (ENA) Gas 2015 seminar in Melbourne in June, Ms D’Ambrosio told industry representatives that although the eastern Australian gas market is experiencing a rapid transition amid expiring contracts and LNG exports, the Government will continue its moratorium on onshore gas exploration.

Also speaking at the event, Australian Industry Group Chief Executive Innes Willox said the market is experiencing significant issues surrounding price, supply, and competition.

Mr Willox flagged pipeline capacity trading and a “˜use it or lose it’ policy for gas permits as a potential solution to the gas supply issues.

Origin submits application for Vic pipeline licence

Origin Energy has submitted a public notice of application for pipeline licence number PL 6009, from Halladale, 500 m from the Victorian shoreline, to the Otway Gas Plant.

The steel DN 200 mm pipeline will be used to convey gaseous and liquid hydrocarbons from the Halladale, Black Watch and Speculant (HBWS) well site in Nirrranda South to the Otway Gas Plant.

The same trench will include a steel DN 50 mm pipeline which will convey mono-ethylene from the plant to a connection point at the well site.

Construction on the pipeline is anticipated to commence in October 2015, with a planned completion date of May 2016.

A copy of the licence application and its accompanying information can be located at Level 16, 321 Exhibition St, Melbourne.

Origin Energy’s Otway Gas Project consists of offshore gas fields, Thylacine in Tasmania and Geographe in Victoria, with gas and liquids extracted using an offshore platform and transported via pipelines to an onshore gas processing plant in Port Campbell, Victoria.

The plant produces an average 60 PJ of natural gas per annum, together with approximately 100,000 t of LPG and approximately 800,000 bbl of condensate or light oil.

Origin is developing the Halladale field for production in the Otway Basin, outside the Otway joint venture.

Second Torquay gas pipeline set for winter completion

As at early June, AusNet Services was on track to complete a second natural gas pipeline from Geelong to Torquay via Armstrong Creek in late June.

The 11 km pipeline will help secure the supply of gas to residents during peak winter periods and provide capacity for up to an expected 5,000 additional homes in Torquay and Jan Juc.

The $2.9 million project will significantly eliminate the risk of supply interruptions during peak winter periods and help meet new connection growth in the areas.

AusNet Services Gas Network Manager Elias Raffoul said the new pipeline will support the burgeoning areas south of Geelong and Torquay.

Directional drilling was utilised throughout the majority of the project to protect existing services within road reserves and minimise impacts to the local flora and fauna.

In addition to the new pipeline to Torquay, AusNet Services is preparing to extend its reticulated natural gas network to Bannockburn and Winchelsea, as part of the State Government’s gas extension program.

Cooper Energy completes Sole gas field acquisition, project begins FEED

Cooper Energy has completed its acquisition of a 50 per cent interest in the Sole gas field and Orbost Gas Plant in Victoria, with the project entering front-end engineering and design (FEED).

The Sole Gas Project is expected to comprise a single vertical subsea well and pipeline to the Orbost Gas Plant which is connected to Jemena’s 797 km, 450 mm Eastern Gas Pipeline, while the Orbost Gas Plant will continue processing gas from the Longtom gas field.

Completion of the acquisition has resulted in Cooper Energy booking 2C contingent resources of 106 PJ of sales gas.

The VIC/RL3 joint venture, comprising Cooper Energy and Santos, will now work to complete FEED for a final investment decision (FID) in the September quarter of 2016.

Cooper Energy Managing Director David Maxwell said that the commencement of FEED was a significant milestone for the project and the company.

“Together with Santos we are now working on completing the detailed analysis, design and costing necessary for the decision on developing the Sole gas field,” Mr Maxwell said.

“The current outlook is very encouraging, with gas prices and field development costs trending favourably for economic development of Sole.

“We believe that Sole, as a conventional gas field, nearby existing infrastructure, is a competitive and attractive source of gas for eastern Australia.”

Gas market offtake contracts and finance for project construction will be developed in parallel with FEED.

The Sole gas field is expected to provide gas supply of approximately 25 PJ/a over eight years after commissioning in late 2018.

The field is located 65 km from the Orbost Gas Plant, onshore Victoria and 35 km from Cooper Energy’s Basker-Manta-Gummy (BMG) gas and liquids resource.

St Albans to Werribee Water Pipeline surges towards completion within the year

The St Albans to Werribee Water Pipeline, part of Melbourne Water’s Water for a Growing West Project, is continuing to progress towards completion in late 2015.

The 17 km, 750-1,200 mm water main will supply water to Cowies Hill reservoir in Tarneit from the St Albans reservoir.

Spanning three city councils – Brimbank, Melton and Wyndham – the water main will service 40,000 homes and is designed to transfer a maximum of 200 ML/d of water.

The project is being delivered by John Holland on behalf of Melbourne Water.

VNIE looping commissioning imminent

APA Group’s Victorian Northern Interconnect Expansion (VNIE) Project is progressing well, with construction on the fifth and final loop is complete, and hydrotesting now underway, at the time of writing.

Ongoing punch list items are being addressed by construction contractor Nacap.

The VNIE Project involves looping sections of the existing 260 km Victorian Northern Interconnect (VNI) Pipeline to increase capacity, as well as increasing compression capacity north and south of the VNI, which runs from Wollert, north of Melbourne to Barnawartha, south of the Murray River.

Eastern Gas Pipeline transportation agreement signed

AGL Energy has entered into a gas transportation agreement with Jemena Eastern Gas Pipeline to purchase pipeline capacity on the 797 km Eastern Gas Pipeline over 15 years from 2016.

The 797 km, DN 450 diameter Eastern Gas Pipeline transports natural gas from the Gippsland Basin in Victoria to demand hubs in Sydney, Canberra and Wollongong as well as a number of regional centres including Bairnsdale, Cooma, Nowra and Bomaderry.

The gas transportation agreement helps underpin the midline compression capacity expansion of the pipeline and will enable AGL to secure competitive foundation haulage tariffs to New South Wales and the Australian Capital Territory.

The deal, together with existing contracted pipeline capacities, a supply purchasing agreement in the Bass Strait, and the development of the Gloucester Gas Project, aims to support AGL’s supply arrangements for customers in the NSW and ACT well into the next decade.

Esso replacement pipeline construction likely to begin this year

Esso Australia is seeking regulatory approval to install a replacement pipeline to transport crude oil and condensate between its facilities at the Longford gas processing and crude oil stabilisation plants in the Bass Strait and the Long Island Point plant, situated 75 km south-east of Melbourne.

It is intended that the replacement pipeline will be constructed adjacent to the existing pipeline within existing easements held by Esso, which are set aside for its current crude oil, condensate, and LPG pipelines.

This would replace the existing 700 mm pipeline, which is approaching the end of its operational life after being constructed in 1969.

The new pipeline is expected to be 350 mm in diameter, should it be approved.

The pipeline will allow the continued delivery of crude oil and condensate, and will also ensure that natural gas from its offshore Gippsland operations continues to flow to Australian households and businesses.

The replacement would represent another significant investment in the continuation of the company’s Gippsland operations since it commenced operation in 1969.

Esso originally anticipated that construction of the replacement pipeline could commence towards the end of 2014.

Industry sources told The Australian Pipeliner that pre-planning works for the pipeline are ongoing, and construction work on the project is likely to begin in the second half of 2015.

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