Chevron, AWE moves improving gas certainty

Certainty around the state’s domestic gas supply received a boost today, with the Chevron-led Gorgon project delivering first domgas to Synergy and AWE taking the next step towards the development of stage two at the Waitsia gas field.

The Gorgon domgas plant has a first-stage capacity of 150 terajoules per day, although a further expansion would take that number to 300tj/d, enough to power 2.5 million households.

Synergy has a number of gas-fired electricity generators in the state’s South West, including around 850 megawatts of pure gas-fired plants and a number of facilities with mixed gas and other fuel capacity.

Coal remains the South West Interconnected System’s most used fuel for generation, however.

It comes a day after the Australian Energy Market Operator’s annual gas industry review found that the state would likely have an oversupply of 640tj/d by 2021.

But that would be subject to commencement of production at Gorgon stage 2 and Wheatstone.

Australian Petroleum Production and Exploration Association spokesman Stedman Ellis said the Chevron announcement, and a recent decision by AGL to enter the WA domestic market, were evidence that the sector was healthy.

“Western Australians are clearly benefiting from increased gas supply and increased competition,” said Mr Ellis, who is APPEA's chief operating officer Western Australia.

“As the Australian Energy Market Operator noted in its ‘Gas Statement of Opportunities’ report yesterday, WA has more than enough gas to meet its export and domestic requirements.

“Concerns that a successful gas export industry would jeopardise local supply are clearly misplaced.”

Synergy chief executive officer Jason Waters said the supply of gas from Gorgon would be important for energy security.

“The ongoing supply of gas from the Gorgon project will ensure Synergy continues its role as the major electricity supplier in the SWIS,” Mr Waters said.

“Natural gas will continue to play an important role in servicing Synergy’s customers’ needs and underpin the reliable supply of electricity to the South West of WA in the future, particularly as the business transitions to cleaner forms of generation.

“The first delivery of domestic gas from the Gorgon project is the realisation of a very productive relationship that has been forged between Synergy and the Gorgon project partners over a number of years.”

Energy Minister Mike Nahan said Gorgon contract would supply Synergy for the next 20 years.

"This significant long-term contract with Synergy ensures supply into the future for the state's industrial, commercial and household use," Dr Nahan said.

"Natural gas continues to be an essential energy source as a reliable and cost-effective way to generate electricity.

"It plays a key role in ensuring we are able to meet our energy needs of the future and in providing a clean energy future."

Perth Basin

Waitsia is 50 per cent owned by AWE, with the first stage of the project producing around 10tj/d.

The second joint venture partner is Origin Energy, which had previously been looking to sell its Perth Basin assets but announced earlier this week it will be spinning them off into a new company focused on upstream oil and gas.

AWE chief executive David Biggs said the joint venture had approved a budget and schedule for appraisal drilling at the Waitsia two and three wells.

That will occur in April to June of next year if environmental approval is granted.

The company has commenced tendering for stage two gas, which could produce up to 100tj/d for 10 years.

“We have received an exceptional response from potential customers with bid volumes totalling more than double the joint venture’s 2P Reserves,” Mr Biggs said.

“The decision to align with customer demand from 2020 onwards is bearing out and discussions with potential buyers are proceeding well.

“Feedback from potential customers indicates that gas from Waitsia stage two is a welcome addition to the WA domestic gas market because it increases diversity of producers and offers a lower risk onshore supply train.”

Mr Biggs said the move by Origin to list their upstream gas business would be a positive for the Waitisia project.

The project would represent about 25 per cent of the new entity’s reserves, he said.