Natural gas infrastructure developer APA Group says it will spend up to $140 million over the next two years building a gas storage facility near Dongara, one of two new state government initiatives designed to boost the state's energy security.
Natural gas infrastructure developer APA Group says it will spend up to $140 million over the next two years building a gas storage facility near Dongara, one of two new state government initiatives designed to boost the state's energy security.
Energy Minister Peter Collier said the government has approved a long-term arrangement between Verve Energy and the APA Group that would lead to further development of the Mondarra Gas Storage Facility, near Dongara.
The expansion will increase Mondarra's storage capacity by over five times, providing for more than 120 terajoules per day of gas supply for several weeks in the event of a crisis.
APA managing director Mick McCormack welcomed the state government support.
"The Western Australian Energy Minister and the Gas Supply and Emergency Management Committee he established recognise the major role the expanded Mondarra facility will play in shoring up the state's energy security, minimising future gas supply disruptions for the state," he said.
Mr McCormack said engineering and procurement work for the expansion had commenced, with completion scheduled for early 2013.
"Given the issues around gas supply in Western Australia in recent years, APA is taking the lead in developing a market driven outcome to enhance energy reliability and strengthen gas supply security for customers," Mr McCormack said.
"In addition, an expanded Mondarra gas storage facility will provide our customers with supply options and flexibility to better manage their gas supply and demand portfolios."
Meanwhile, Mr Collier announced the Independent Market Operator (IMO) has been selected to operate a Gas Bulletin Board (GBB) and develop a Gas Statement of Opportunities (GSOO) for WA.
Mr Collier said both projects were key recommendations of the Gas Supply and Emergency Management Committee (GSEMC).
The Minister established the committee in the wake of two gas supply disruptions in 2008. The committee's report made several recommendations to help avert future gas shortages and improve WA's energy supply security.
"The GSEMC identified gas storage as one of the cost effective mitigation measures that could be implemented, while establishing the GBB and GSOO were also key recommendations from the report, presented to me in 2009," he said.
Mr Collier said once operational, the expanded Mondarra Gas Storage Facility would provide additional gas supply in the event of a future gas shortage, servicing the demands of electricity and gas customers in the South West Interconnected System.
"It will provide for well in excess of 120 terajoules of gas supply for several weeks in the event of a crisis, meeting critical downstream needs, including electricity generation," he said.
"The new contract arrangements will provide Verve Energy with up to 90 terajoules a day, enabling an additional 800 megawatts of gas-fired generation to operate during peak demand periods for up to 60 days.
"To provide some context, 90 terajoules a day is more than twice the consumption of the residential gas market."
"The Mondarra facility will also allow Verve Energy to store additional gas that it is required to pay for but does not use, which Verve can then use when it is needed.
The Minister said the appointment of the IMO reflected the GSEMC's recommendation for an independent WA body to administer the GBB and GSOO, and represented a key milestone towards implementing these initiatives.
The GBB may also incorporate a service for introducing sellers and buyers who wish to conduct incremental gas trades.
"The GBB will provide web-based up-to-date gas system and market information across the gas supply and demand chain in WA, and will use the existing infrastructure of the successful Eastern States bulletin board, administered by the Australian Energy Market Operator," Mr Collier said.
"The GBB will provide greater visibility on the near-term availability of gas as a commodity and its transport, whereas the GSOO will provide regular long-term gas supply and demand forecasts to help inform future investment decisions in WA.
"The GBB and GSOO will greatly improve information transparency on gas supply and demand to the wider public, and provide for a more competitive and dynamic gas market in the state."
