APA, Origin Energy at Work to Increase Gas Flow to New South Wales

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Researched by Industrial Info Resources Australia (Perth, Australia)--There has been a great deal of speculation regarding the potential gas shortage that New South Wales could be facing in the near future. APA Group Limited (ASX:APA) (Sydney, New South Wales), Australia's largest transmission pipeline company, has signed an agreement with Origin Energy Limited (ASX:ORG) (Sydney) to supply natural gas for a term of six years, commencing in December 2013.

APA's current infrastructure in this part of the country is sufficient to meet the demands of the new sales agreement in the short term; however, in order to guarantee supply, APA is looking to increase the capacity of the Northern Zone of the Victorian Gas Transmission System by 59%. Current pipeline capacity is about 570 million metric standard cubic feet per day (MMSCFD), which represents an increase of about 336 MMSCFD. In order to achieve this increase, APA has announced plans to loop sections of the existing Woollert-to-Barnawartha Natural Gas Pipeline.

Looping is the process whereby a new pipeline is constructed parallel to an existing pipeline in order to increase the capacity. Generally, the new pipeline is laid within the same corridor as the existing pipeline and is attached to the same infrastructure, such as delivery points and compressor stations.

"We continue to adapt APA's gas pipeline infrastructure to serve the changing needs of our customers, particularly during this time when New South Wales requires increased flexibility in its sources of gas supply," APA Managing Director Mick McCormack commented on the company's relationship with Origin. "APA has a longstanding commitment to work with our customers to identify--and invest in the development of--gas infrastructure required to support their business."

APA Group will design and engineer the project using its own staff, but will release tenders for the construction contract around mid-November of this year. The overall budget for the project is expected to be about $61 million.

APA Groups and Origin Energy hope to take a step in the right direction for the state, which is almost completely dependent on gas sourced from across state borders.

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