8 minute read

A step closer to gas supply security

Gas is a critical part of the transition to a low carbon future; without it an orderly transition to a clean and reliable energy supply is more difficult.

Phaedra Deckhart
Phaedra Deckart
12 June 2018

Gas is a critical part of the transition to a low carbon future; without it an orderly transition to a modern, clean and reliable energy supply is a lot more difficult because we need peaking gas generation to supplement wind and solar, until large scale energy storage technology improves.

Unfortunately, limited domestic gas exploration and significant long-term gas export contracts led to the Australian Energy Market Operator (AEMO) recently predicting gas shortfalls in eastern Australia as early as 2021.

In searching for a solution, it became clear that importing gas, while counterintuitive given Australia’s abundance of natural resources, was the only way to bring increased gas supply to the Southern markets within the timeframe required. Consequently, in 2016 we began the search for a location for a Floating Storage and Regasification Unit (FSRU) where we could ship in liquefied gas from the west coast and international markets and turn it back into gas at the jetty.

In August 2017 we announced Victoria’s Crib Point as the preferred site following an extensive scoping study in 2016-17 and evaluation of alternative sites in New South Wales and South Australia.

Crib Point was found to be an ideal location because;

  • it will utilise existing infrastructure at Crib Point by refurbishing Crib Point Jetty Berth 2,
  • minimises the footprint for the project by making use of a jetty that had been underutilised.

Once constructed, the Crib Point Pakenham Pipeline, will connect the LNG import jetty into the existing domestic pipeline infrastructure, to flow gas to Victoria, South Australia and New South Wales and helping to underpin energy security for eastern Australia. Together, the jetty and pipeline will provide access to the biggest market for gas demand in the southern states, providing much needed peaking capacity during the winter period and long term security of supply.

Today AGL is committing to $37M in capital expenditure and has signed two agreements, which bring the project a step closer. The agreements are with:

  • APA Group for the development and construction of the Crib Point Pakenham Pipeline and the ongoing transportation of gas from the proposed LNG import jetty to the domestic market. APA will continue early work, including sourcing certain long lead-time items for the development of the proposed pipeline; and
  • the Port of Hastings Development Authority to begin jetty remediation works to prepare for AGL’s use of Crib Point Jetty Berth 2 for the continuous mooring of a floating storage and regasification unit (FSRU).

The project as construction and operation of the pipeline are subject to regulatory approvals, the granting of the pipeline licence and final investment decision by the AGL Board.

 

More than ten large commercial and industrial customers responded to our plan by signing MoUs with AGL prior to the announcement of the preferred site last year, indicating their support for the project and for increased supply of gas brought in through the FSRU; giving them confidence they will have an affordable and secure energy supply.

We started work on this project two years ago and since then have held 15 community meetings to work through community concerns and ensure we make a positive contribution to Crib Point and surrounding communities. We will continue to work with the community and other key stakeholders to enable a final investment decision on the AGL LNG Import Jetty during the 2019 financial year, for delivery of first gas into the domestic market in 2020 – 2021.