Western Australia's Bunbury-to-Albany Gas Pipeline Faces Budget Hurdles

---

Researched by Industrial Info Resources Australia (Perth, Australia)--The people of Albany, Western Australia, may have to wait a little longer to be connected to the state gas supply grid after plans stalled for the Bunbury-to-Albany Gas Pipeline.

If the pipeline goes ahead, it will be with a substantial government subsidy. "Our intention is that we would make some mix of an upfront capital contribution, and then an ongoing subsidy; as the usage of the gas goes up the subsidy would go down," said Western Australian Premier Colin Barnett.

However, recently released Treasury documents have cast doubt on the future of the project: Potential gas use is expected to be lower than first thought, meaning a higher subsidy for a longer period would be required.

Barnett first announced plans for the long-distance gas-transmission pipeline in November 2012. At that point, many important factors--such as an experienced gas company to run the pipeline and an anchor customer to make the project viable--were still undecided. But prospects looked promising, as gas company ATCO Group (TSX:ACO.X) (Alberta, Canada) was in talks with the state government about its possible involvement as the main infrastructure operator. Verve Energy, the state-owned electricity generator, signalled that it was considering construction of a small-scale, gas-fired power station in, or near, Albany--meaning it could be the required anchor customer.

The Department of State Development has chosen a corridor for the 217-mile (350-kilometer) pipeline and has started to secure the required land access agreements. It is proposed that the Bunbury-to-Albany Gas Pipeline will act as an extension of the existing Dampier-to-Bunbury Natural Gas Pipeline (DBNGP), the 1,489-kilometer pipeline owned by DBNGP Nominees Pty Limited (Perth, Australia). The DBNGP already supplies gas to the Perth Metro area from the state's gas-processing facilities in the northwest, and has recently undergone the Stage 5B expansion in anticipation of increased demands from future development, such as the Bunbury-to-Albany Natural Gas Pipeline.

The state government says it has put together a proposed commercial model, which it will take to the market in due course, and that there is no reason to believe the project cannot be completed within this term of government. But that will depend on how quickly a private-sector partner can be secured.

View Project Report - 300096168

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.