04/01/2022 - 13:20

BCI prevails in dispute with gas giants

04/01/2022 - 13:20

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Kerry Stokes-backed BCI Minerals is set to proceed with its $1.2 billion Mardie project after overcoming opposition from Santos and Chevron, which were concerned about risks to WA’s gas supply.

BCI prevails in dispute with gas giants
BCI Minerals has reached access agreements with Santos and Chevron. Photo: BCI Minerals

Kerry Stokes-backed BCI Minerals is set to proceed with its $1.2 billion Mardie project after overcoming opposition from Santos and Chevron, which were concerned about risks to WA’s gas supply.

In a brief ASX announcement on 23 December, BCI said it had executed access agreements with Santos, as operator of the Varanus Island gas pipelines, and Chevron, as operator of the Gorgon domestic gas pipeline.

The agreements set out the conditions for safe interactions between the Mardie salt and potash project and the three gas pipelines, which intersect the project's salt ponds.

BCI said the agreements allowed for objections to its project to be lifted.

That will facilitate the grant of key mining tenure by the Department of Mines Industry Regulation and Safety (DMIRS), which is the final requirement before construction at Mardie can commence.

BCI managing director Alwyn Vorster said the signing of the access agreements was another major milestone for Mardie.

“I acknowledge our valued partners Santos and Chevron for their support and commitment towards achieving a mutually acceptable result,” he said.

That’s a big turnaround from last year, when Santos said there was significant risk that proposed Mardie infrastructure could result in damage to the two Varanus Island pipelines, which are a major supplier of gas to industry in WA.

Its concerns were summarised in an environmental review prepared by Preston Consulting in March 2021.

Santos said the environmental review document submitted by BCI subsidiary Mardie Minerals contained inaccurate statements.

“The ERD indicates that Santos and Mardie have agreed to commence negotiating an access agreement,” the Preston review stated.

Santos has declined to commence these negotiations unless and until further information is made available.

“The ERD indicates that Santos is receptive to Mardie’s technical designs.

Santos has not received technical designs that adequately address Santos’ concerns regarding safety and integrity of the VI Pipelines.

“The ERD does not mention Santos’ objections to the grant of the Mardie mining tenement application in the warden’s court proceedings.”

BCI countered by saying Santos had failed to provide any information in support of its allegations.

Santos, as competent pipeline operator, ought to have internal safety management standards to assess and manage the interactions between the proposed infrastructure and the gas pipelines,” according to Preston’s summary of BCI’s response.

“In any event, Mardie Minerals has unsuccessfully sought Santos’ input and cooperation in relation to the preparation of a safety management study to assess and manage the interactions between the proposed infrastructure, the proposal activities and the gas pipelines.

“As at the date of this letter, Santos has consistently refused to engage with Mardie Minerals on any of these matters.”

The Preston review did not address Chevron’s concerns.

The three underground pipelines (2 Santos, 1 Chevron) are contained in a 50 metre wide corridor that intersects the salt evaporation ponds.

BCI said it has already placed hard barriers at site to avoid unintended interaction with the gas pipeline easement.

These include fencing on both sides of the corridor, movement sensor cameras and locked gates.

It added that employees and contractors will receive detailed training and spatial locators will become standard.

Meanwhile, BCI has announced that McConnell Dowell Constructors has been awarded a $190 million contract for the project’s marine structures.

This is the largest direct capital works contract for the project and follows a competitive Early Contractor Involvement process over four months.

The package includes a piled, 2.4 kilometre jetty with head-end platform, berthing and mooring dolphins, and a conveyer system including a shiploader.

Mardie is the foundation project for the proposed Port of Cape Preston West which will be controlled by the Pilbara Ports Authority.

Jetty construction is scheduled to commence in Q4 2022 subject to associated approvals.

BCI is targeting first salt on ship in Q4 2024.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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