Bunbury-to-Albany Gas Pipeline in Western Australia Moves One Step Closer to Reality

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Researched by Industrial Info Resources (Perth, Australia)--When West Australian Premier Colin Barnett first announced plans for a Bunbury-to-Albany natural gas pipeline in November 2012, many important issues, such as an anchor customer and a sufficiently experienced operator, were still to be decided. Recent announcements suggest that Albany's long wait to be connected to the state's main gas supply may be over.

Canadian gas company ATCO Group (TSX:ACO.X) (Alberta, Canada) has been in talks with the state government for some time about possible involvement in the project as the main infrastructure operator. Now it appears that both an industrial and commercial customer has been secured. Alinta Energy Pty Limited (Sydney, Australia) operates the reticulated gas network in the Perth Metropolitan Area and serves more than 700,000 homes throughout Australia.

Alinta Chief Executive Jeff Dimery said that as the state's only reticulated household gas retailer, it would be interested in building a domestic gas supply network if the chance arose: "We wouldn't be pursuing the ownership of the pipeline, but clearly we would be interested in any potential customers that might connect in from a retailing or gas sales perspective."

In addition to the possibility of a domestic gas supply, Verve Energy, the state-owned electricity generator, has signalled that it is considering building a small-scale, gas-fired power station in or near Albany.

"Our intention is that we would make some mix of an upfront capital contribution and then an ongoing subsidy," Barnett said. "As the usage of the gas goes up, the subsidy would go down.

"So it is intended that Verve will build a 30- or 40-megawatt gas plant there at some stage, so that would become a customer. The gas station would also help to stabilise the South West Interconnected Grid, and that makes it easier to introduce renewable energy onto the grid."

He would not give details about the costs or timing of the Verve plant, but the government is understood to be finalizing an announcement on the project before the March election.

Grange Resources was under pressure from the government to use gas to power its magnetite iron ore project in the area, which has since been shelved amid financial troubles.

The pipeline will draw gas from the Dampier-to-Bunbury Natural Gas Pipeline (DBNGP), the 1,489-kilometer pipeline owned by DBNGP Nominees Pty Limited (Perth, Australia), that already supplies gas to the Perth Metro area from the state's gas processing facilities in the northwest. The DBNGP has recently undergone the Stage 5B expansion in anticipation of increased demands from future development, such as the Bunbury-to-Albany Natural Gas Pipeline.

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