See also insights from presentations at CIP seminars: Gas in Queensland Gas in New South Wales (including coal bed methane) Gas in the Northern Territory Gas in South Australia Energy (USA DOE) BP AMOCO World Energy Woodside
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Gaslines and reserves in Australia
(One petajoule is about 20 000 tonnes of gas)
Total gas135tcf (without PNG reserves) implying a hundred years of usage, or 50 years with exports.
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Offshore NW shelf gas was discovered in 1971 and in 1979 the Federal an WA government signed an agreement to allow for the production and export of the gas.
In 1980 contracts were signed with the government gas agency SECWA to supply gas to the domestic market so underpinning the project. Export began in 1989.
Australia produces 9 per cent of the world production of LNG gas of 82 million tonnes. By year 2005, Western Australia could be producing one-quarter. World wide there are 8 producers of LNG which is the fastest growing energy sector. Since 1990 growth has averaged 6.7 per cent. Studies suggest a growth to 160 million tonnes by 2010.
Gas is estimated to represent 23 per cent of world energy supplies anticipated to grow to 29 per cent by 2020 (oil anticipated to remain at 40 per cent, coal falling from 26 to 24 per cent)
Gas sources in Australia are North West Shelf, Northern Australia, Timor Sea, Gorgon fields and Browse Basis with reserves of 100 trillion cubic feet. (1 tcf equals 19.4 million tonnes of gas or 1 petajoule). The north west shelf alone has reserves of 40 tcf more than enough to maintain current production for 30 years. Scott Reef/Breakneck at 21 tcf, Greater Gorgon at 28tcf plus the nearby Chrysaor field.
See also the Northern Territory.
In recent years the gas centre of Australia has moved from Bass Strait to WA. Western Australia's gas industry now produces 7.5 million tonnes of LNG per year (first shipment in 1989). There are three production trains with a fourth announced in April 2001.
NWS Shelf gas facilities (2001)
In April 2001, a fourth production train to process 4.2 million tonnes of LNG was announced. To cost A$2.75 billion due for completion mid 2004 it will take production from the Burrup to 11.7 million tonnes per year. The expansion includes a 105 cm pipeline to cost A$800 million.
There was no mention of ethane extraction to address the frequently promoted Pilbara Petrochemical Project.
In April 2001, Woodside predicted Australia could be producing 28 million tonnes of LNG by 2012 with six trains in WA and three in the Northern Territory. A gas hub at the Burrup could supply 2100 tjs/day with 800 for gas to liquids, 800 for industry and 500 for petrochemicals. The Northern Territory could be producing 1300 terajoules per day for industry and chemical plants in south east Australia.
In May 2001 it was estimated that by 2010 sales of LNG worldwide would be 146 million tonnes per year with Australia anticipated to supply 28 million tonnes and the Asia Pacific region representing 130 million tonnes.
Gas to liquids
Ownership of gas plants
The North West Shelf Gas Project LNG plant is owned equally (one-sixth each) by Woodside Offshore Petroleum, Shell Development, BHP Petroleum (NWS), BP Developments Australia, Chevron Asiatic and Japan Australia LNG (Mitsui and Misubishi (MiMi).
Shareholders in its production are Woodside Petroleum (34 per cent owned by Shell, balance by public listing); and one-sixth each by Shell, BP, Chevron, Mitsui/Mitsubishi and BHP.
With development of Wannea/Cossack oil, in 1995 LPG extraction facilities were established. LPG is extracted from Rankin/Goodwyn gas field and with the Wanea, Cossack, Lambert and Hermes fields. The LPG is in excess of that need to meet agreed selling specifications from LNG and domestic gas. Production capacity is 800 000 tonnes per year. (Around 750 000 tonnes pa. of LPG is produced scheduled to more than double to 1.7 million tonnes by year 2001.
The Wesfarmers LPG facilities at Kwinana is increasing capacity at its extraction plant by 60 000 tonne/year to 300 000 tonne/year (costing A$20million by 2001). It includes storage for 52 000 cm propane and 65 000 cm butane.
The Carnarvon Basin of which the North West Shelf is part, has more than one-half of Australia's reserves. The Brass Basin to the north represents another 25 per cent and the Bonaparte Basin contributes another 8 per cent. The three basins, referred to as the North-West Shelf, account for 80 per cent of Australia's gas reserves.
Northern Australia LNG is owned by Shell and Woodside.
New marketing body
Australian LNG has been created (early 1999) by Shell Development Australia, Woodside Energy, BP Development Australia, Chevron Corporation, BHP and a joint venture of Mitsui and Misubishi (MiMi). The aim is to act as a central authority to coordinate sales of liquefied natural gas into Asian markets other than Japan.
Not a member are Mobil Exploration and Producing Australia (MEPA) and Texaco (who are prepared to share infrastructure but not marketing).
Some 250 km west of Dampier (230 km offshore northwest of Onslow) in excess of 200 metres of water), where the NW shelf gas is brought ashore are the massive Gorgon gas fields. Proven reserves are 400 billion cubic metres which is double the reserves when the North West Shelf development commenced. It is being developed by a consortium two-sevenths shares each of Shell, Chevron, and Texaco and one-seventh by Mobil and would cost A$8bilion.
It aims to produce 7 million tonnes of LNG in two trains on commencement in 2003 and a second stage in 2005. Containing 13 per cent carbon dioxide and 4 per cent nitrogen, at stage 1, the project will be stripping 1 million tonnes of carbon dioxide per year. The North West shelf vents its much smaller production for venting to the atmosphere. (Note a "train" produces between three and four million tonnes of LNG pa.Does the production of 1 million tonnes of carbon dioxide (which clearly has some environmental implications) and nearby salt production suggest an application for the carbon dioxide such as a modified Solvay process for production of soda ash with ammonium chloride (for rice paddy fertiliser)?
WA domestic gas
Total domestic gas demand (1998) is 250 petajoules per year (all applications including BHP DRI). It includes 580 Tj/day via the Dampier to Bunbury line; 170 Tj/day for the Pilbara Energy line (to Port Hedland inc for HBI); 88Tj/d for the goldfields and 65Tj/day for the Parmelia line (420 km owned by CMS; from Dongara to Pinjarra including Alcoa).
A second line is under evaluation by Texaco and CMS Energy from Carnarvon Basin (Gorgon) to Mid West including Geraldton for Kingstream. It needs markets for 300 Tj/day/
Gas prices have been negotiated from around A$1.50 per gigajoule plus pipeline overhead charges as relevant.
The Government gas regulator, using a capital base of A$1.55bn, return on equity of 12.5 per cent and a weighted cost of capital of 7.4 per cent real before tax concluded that tariffs will be from Dec 2000, A$1/gigajoule to Kwinana, $1.06 to Rockingham and $$1.08 to Bunbury.
Note Epic Energy purchased the line for $2.4billion from the WA government in 1998, ie. some A$0.8 billion more than valued by the regulator.
The gas line (1 640 km, established in 1984) provides some 500 terajoules (nominal capacity is 440 terajoules but delivering a peak of 490 tjs) per day gas to the Perth region from the North West Shelf. The Alcoa Group has contracted to purchase 175 terajoules per day until 2020 currently using 210 terajoules.
A second line, Parmelia owned by CMS, brings gas from Dongara to Pinjarra to service the alumina users.
The gas at Kwinana (about 85 per cent methane) at current demand contains (on an annual basis) contains about 240 000 tonnes of ethane, 120 000 tonnes of propane and 50 000 tonnes of C4 (butanes/butenes).
The composition of natural gas (per cent mol, ie. not per cent mass) is:
|Component||Per cent (mol)|
Gas Line Sale
In March 1998 the physical assets of the line was sold for A$2.407 billion to Epic Energy Australia (60 per cent US owned). The government will retain the easements to allow for future expansion.
Features of sale include;Note
100 per cent ownership; Expansion rights to new owner; and Transport tariffs to reduce by year 2000 from A$1.19 in 1998 to A$1.00 per gigajoule by January 2000. (Note the comparison to Goldfields line.) Epic will spend $874 million to double the capacity of the pipeline by 2007.
In July 2001, the Office of Gas Regulation in WA valued the line at A$1.2 billion in its draft report and with a 13.6 per cent after tax return, considers the tariff should be around A$0.75 to A$0.84 per gigajoule compared with the A$1.00 expectation that predicated its purchase.
In February 1997, a US firm Pacific Gas and Electricity offered to build a stand-alone A$1bn gas line to the south west of the state - a status that would reduce the value of the AlintaGas line by A$400m
According to the West Australian (26 February 1997), AlintaGas has bid A$0.62 per gigajoule (pipeline overhead only) with bids from other sources below A$0.60. As Kingstream requires government assistance for its project, it could face state government pressure to accept the AlintaGas offer that would ensure its monopoly and, in precluding competition, provide for the highest possible price for its pipeline when sold this year. The proposed pipeline overhead charge just one-half that incurred at Kwinana for a destination nearly three-quarters the distance from the source should be noted.A smaller gas line (East Spar, operated by Apache) provides gas to the Goldfields region east of Perth (to 100 terajoules per day).
In February 1998, the Australian Competition and Consumer Commission ruled the arrangement as being uncompetitive as Alinta would thereby discourage the building of a second (and competing) gas line. The West Australian Government withdrew the arrangement.
In 1999, a second line is under consideration 1000 km from Onslow to Geraldton to bring gas from the Onslow Basin (primarily Gorgon field). It would require 500 tj per day to justify (300tj for the pipeline without Gorgon that would cost US$1 billion to develop). It would be reliant on Kingstream Steel, Mid West Iron and Steel, Dow/Shell's PPP and Mt Gibson Iron.
Apache Energy also provides gas from Wonnich to Varanus Island that also gathers gas from Harriet field and by 12 and 16 inch pipelines to the mainland providing 22 PJ or 22 per cent of domestic market.
A 530 km lateral from the Dampier-to-Bunbury line, beginning at Geraldton is under consideration for the Windimurra vanadium project and possibly to Murrin Murrin nickel east of Leonora (and east of the Goldfields gas line!). The high cost of the Goldfields line is promoting the use of a lateral from the larger domestic line.
Epic Energy has purchased (December 1997) for A$129m two gas lines:See also DRI and iron.
a 24 km Burrup to the Dampier-to-Bunbury gas line (to Mainline Valve 7 (MLV7)) with a capacity of 500 terajoules per day (clearly strategically important with expansion in domestic gas consumption including An Feng Kingstream in which Epic has a contract to supply its gas). The line has a 600 mm pipeline providing an independent line to the Port Hedland line. a 219 km line (455mm) from MLV7 on the Dampier-to-Perth Line (24 km from the head of the Burrup Pensinsula) to Port Hedland's with a capacity of 178 Terajoules per day (165 to be used) for BHP's power station and HBI iron plant.
Wesfarmers LPG Ltd (a local company) established in 1988 extracts LPG (C3 and C4). It has a production capacity of 300 000 tonnes of LPG and 25 000 tonnes of condensate. It has been producing 255 000 tonnes of LPG and 5 000 tonnes of condensate, exporting 150 000 tonnes of LPG (to Japan).
LNGLNG from Australia is wet with a heating value higher than most LNG at 10 500 kc/m3 (44 megajoules/m3) which is complemented in Japan with LPG to bring it to 11 000 kc/m3. It is worth noting that dry LNG (ie. methane only) is about 38 megajoules/m3 (14 per cent less). There are some interesting implications to this!
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