APA Group to Build Natural Gas Pipeline with Armour Energy

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Researched by Industrial Info Resources (Perth, Australia)--Australia's largest gas pipeline company appears to be increasing the size of its network in the near future, with the signing of a recent heads of agreement (HoA) that will see a new pipeline built and a number of existing pipelines upgraded.

APA Group Limited (ASX:APA) (APA) (Sydney, Australia) is Australia's largest natural gas infrastructure company, owning or operating more than $11.2 billion (AU$12 billion) of gas infrastructure assets. Its gas transmission pipelines span every state and territory in mainland Australia, delivering approximately half of the nation's gas usage. Earlier this month, APA Group announced the signing of a HoA with Armour Energy Limited (ASW:AJQ) (Brisbane, Australia) to facilitate the transportation of up to 330 petajoules of gas per annum from Armour's Northern Australian gas projects to various markets in Mt. Isa, Sydney and Queensland.

In announcing the agreement, Mick McCormack, the managing director of APA Group, said: "We are pleased to be working with Armour Energy in their gas development. Our pipeline network positions us to work with potential new producers, such as Armour Energy, to facilitate timely entry of gas into the domestic and international markets."

Armour Energy focuses on the exploration and development of gas and associated liquids resources in northern Australia. Covering approximately 33 million contiguous acres in the Northern Territory and Queensland, Armour Energy has one of the largest shale-gas acreage reserves in Australia.

The HoA states that APA has agreed to work with Armour Energy to explore the development of new pipeline infrastructure. Any investment will be subject to the satisfaction of a number of conditions, including gas resource certification, gas supply and transportation agreements, and final board approvals.

If the project proceeds, it would likely be split into three phases. Phase I will require the construction of a new, 217-mile (350-kilometer) gas transmission pipeline to transport up to 130 petajoules per annum of gas to Mt. Isa from the project area south of Burketown.

Phase II of the project will see existing gas transmission infrastructure upgraded to facilitate the delivery of 200 petajoules per annum to Gladstone to supply the liquefied natural gas (LNG) export industry.

The final phase would see the interconnection of Queensland and Northern Territory gas markets and pipelines, through the use of APA's existing network of pipelines, expanding the pipelines where required and building new pipelines to deliver gas from the Queensland and Northern Territory reserves.

Armour is targeting February 2016 for the delivery of first gas from its north Queensland project into the APA-owned gas transmission network.

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