OPINION

LNG import terminals "disingenuous":  APA chief 

APA Group is set to build a new gas pipeline in Melbourne to get more gas to market, it said today as its CEO Rob Wheals labels the notion of LNG import terminals "disingenuous". 

LNG import terminals "disingenuous":  APA chief 

He reiterated the main argument against terminals used for years: As the world's largest exporter it makes no sense for the Australian east coast to import molecules. The east coast exports one third of Australia's LNG and the west and north the rest. 
 
"It's disingenuous to stop much needed new gas development in Australia, while at the same time supporting higher cost, higher emissions LNG gas imports from elsewhere," he said. 
 
However his company wasn't above disingenuity several years ago when it landed the contract to build a pipeline from AGL's proposed terminal at Crib Point in Victoria to supply the Melbourne market. 
 
That Victorian plan was cancelled by the state government over environmental concerns at the greenfield site.
 
The government is however in favour of one at Viva Energy's existing oil refinery in Geelong. 
 
Squadron Energy has been working since 2018 to get its New South Wales import terminal at Port Kembla up and running but has seen repeated delays despite state and federal government support. It is widely understood it is still struggling to secure long term customers. 
 
Today Squadron's new CEO Eva Hanly suggested pipeline capacity and new onshore gas developments can't get gas to market in time. 
 
"[Port Kembla] is the only solution that can supply gas directly into the East Coast gas network - the other proposals such as developing new gas fields at Narrabri or building new pipelines from Queensland will not be able to deliver gas for years," she said. 
 
"The congestion within the gas pipelines means that there is not a lot of opportunity to bring more gas down from Queensland.
 
"The great thing about this terminal is that it has the potential to ship gas from Queensland directly into NSW, bypassing the congested pipeline infrastructure."
 
The construction comes as price caps have just been removed by the market operator and milder than average winter weather has dampened demand, pushing wholesale spot prices far below their capped price of $40 per gigajoule. 
 
It broke ground today at its Western Outer Ring Main to send more gas from the Iona gas storage facility in the onshore Otway Basin. Levels at Iona recently fell to historic lows as more gas was drawn out to meet electricity needs after coal plant outages. 
 
When complete, the WORM gas transmission pipeline will be 51 kilometres long and provide a new high-pressure connection between existing pipelines at Plumpton in Melbourne's west and Wollert in the north and includes a new additional compressor at the existing Wollert compressor station.
 
The gas pipeline will allow more gas in during peak demand times, APA said today, and make transport more efficient. It will not, however, address actual supply of more gas.
 
The Australian Consumer and Competition Commission warns of a potential 56 petajoule shortfall on the east coast next year, should the three LNG export concerns send all uncontracted gas into international spot markets. 
 
Pipeline bottlenecks in Australia have been an issue. 
 
On June 2 the South West Queensland pipeline that sends gas from the east coast LNG facilities via the Wolleebee station was running at over 90% capacity, meaning it was impossible for the exporters to send more gas to market that day. However it was a short lived issue and largely tangential to the dynamics that led to spiking prices. 
 
"The WORM pipeline builds on our track record of investment to expand our east coast gas grid and will create a vital new link in the Victorian Transmission System that bypasses the low-pressure network in Melbourne's CBD to increase critical gas storage at the Iona Underground Storage Facility for use during peak demand," Wheals said. 
 
The gas will go to Victorian households which use far more than other states for heating, hot water and cooking owing to cheap associated gas from legacy offshore oil fields in the Bass Strait decades ago. 
 
"A more secure supply of gas will also support more gas-fired power generation on days when it is needed, providing firming for renewable generation and further benefiting electricity customers," Wheals said. 
 
He said more pipeline gas was "crucial" and LNG import terminals a bandaid fix that could still be years away. 
 
"As this energy crisis has shown, gas stored at the Iona  facility is crucial in meeting peak gas demand in Victoria during winter with gas use sometimes three times higher in Victoria, compared to summer. 
 
"Critically, gas delivers about two thirds of winter energy demand, double the electricity energy consumption," he said. 
 
The company is also spending $60 million to expand the South West Pipeline from the Melbourne city centre to Iona via further compression. It suggests this can add roughly 8.6% more gas.  
 
The company also plans to expand its gas grid in New South Wales and Queensland by 25% ahead of next year's winter and the following. 
 
"Expanding our east coast gas grid and making this $270 million investment now, will provide a cost-effective, safe and reliable means of transporting Australian domestic gas from northern gas producers to southern markets, ahead of future potential shortfalls in 2023 forecast by the ACCC this week." 
 
 

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