Newcastle LNG import terminal given critical project status

SOUTH KOREAN developer Epik has been granted Critical State Significant Infrastructure status for its proposed Newcastle LNG import terminal in New South Wales, by the state government.
Newcastle LNG import terminal given critical project status Newcastle LNG import terminal given critical project status Newcastle LNG import terminal given critical project status Newcastle LNG import terminal given critical project status Newcastle LNG import terminal given critical project status

Port of Newcastle. Image obtained: Epik

Paul Hunt

Senior Journalist: Oil & Gas, Policy.

Paul Hunt

 

The NSW government made the announcement this morning, essentially streamlining the approval processes and providing a clear pathway to planning approvals.

"This terminal could be operational by 2022-2023 and provide supply for gas-fired power stations, helping to manage energy security during the period in which the Liddell power station is scheduled to close," NSW acting premier John Barilaro said.

 "This LNG terminal would significantly address this risk and help secure a reliable and affordable future for NSW's gas supply."

It is the second LNG project to receive critical infrastructure status from the state. 

In April the NSW government awarded consortium Australian Industrial Energy development approval for the Port Kembla terminal, giving the Andrew Forrest-driven vehicle an edge over AGL Energy's plans in Victoria which are languishing after unfavourable environmental decision by that state government.

It won critical infrastructure approval last year 

Should AIE's go ahead, first gas is expected by 2021.

If built, the Epik Newcastle project will consist of a Floating Storage and Regasification Unit tied into a new jetty on Kooragang Island, connecting it to the east coast gas network.

The import terminal could expand the locally available gas supply in NSW by 110 petajoules and would be built in the Port of Newcastle - an industrial hub home to major gas and power users.

According to Epik the terminal could provide around 80% of NSWs demand, with potential to increase throughput as demand requires.

Currently the state imports some 95% of its gas, though Santos has been pushing on its Narrabri CSG project and suggesting the best gas is found at home. 

Epik estimates the onshore development at the port alone to cost A$250 million. The total estimated project value will come to A$589 million, including the FSRU, which Hoegh will supply.

At the start of this year, Epik also said it was exploring the possibility of additional gas related infrastructure in addition to its proposed import terminal.

The company said this could include a potential gas-fired power station.

Epik believes its terminal will be the most competitive infrastructure solution for gas imports to the state, beating out Port Kembla which began signing up gas customers in June. 

Epik subsidiary Newcastle GasDock Company (NGDC) will now prepare an Environmental Impact Statement for the project, which will be open to submissions from the public.

Following this, the NSW Department of Planning, Industry and Environment will then assess the merits of the project before recommending development approval to the minister for a final decision.

Subject to receiving all regulatory planning approvals, the project could get off the ground in the first half of 2021, according to Epik - which is earlier than the government estimates possible.

"With CSSI status in hand, we are a considerable step closer to delivering the critical infrastructure needed to bring new energy to NSW," Epik founder and managing director Jee Yoon said in a statement.

"Newcastle was chosen because of its strategic location proximate to significant industrial gas and power users, and access into the Sydney Short Term Trading Market, allowing natural gas imported through the Newcastle terminal to reach users throughout NSW and broader southeast Australian market at a competitive price point."

Last month the South Korean developer said it had engaged Wood Mackenzie to conduct a comprehensive analysis of the southeast Australian gas market, and would make the analysis available to third parties interest in taking capacity at the facility provided they sign a non-disclosure agreement.

In total there are five plans for import terminals across the east coast, up until now lead contenders were AGL's Point Crib, and AIE's port Kembla. ExxonMobil has also mulled a terminal due to its large longstanding Australian footprint.

EnergyQuest still believe despite Epik achieving CSSI status, the two front runners for import terminals are AIE in NSW and AGL's in Victoria.

"We've seen a lot of proposals come and go, our view is that there will probably be two terminals that get up on the east coast. Hopefully one terminal in Victoria and at least one in NSW," EnergyQuest CEO Dr Graeme Bethune told Energy News today.

"There are pipeline constraints from Newcastle down to Sydney, so that will be something the Epik proposal will need to contend with. How all this plays out depends on developments in Victoria. The approval process is much more convoluted there." 

Epik says the project distinguishes itself from others by providing storage and regasification services for those looking export LNG to Australia. 

In a statement to Energy News, NSW minister for Planning and Public Spaces Rob Stokes said the government was not concerned about more than one project being granted CSSI status. 

"Reliability and affordability of gas supply is best delivered through a competitive market, with several sources available," Stokes said. 

Epik has been gaining ground since its surprise announcement in December last year, when it was considred at best an optimstic outlier.