DBP opts for a staged capacity expansion on Stage 5

The owner of the Dampier to Bunbury natural gas pipeline has opted for a staged capacity expansion, fuelling speculation that planned expansion projects at Alcoa's Wagerup alumina refinery and BHP Billiton's Worsley Alumina refinery will be deferred.

Dampier Bunbury Pipeline had previously planned a $1.5 billion expansion of the pipeline, on top of the $430 million Stage 4 expansion currently underway.

This was based on requests from shippers (customers) for a 375 terajoule per day expansion of capacity.

However DBP executive chairman Stuart Hohnen said a number of shippers were still completing feasibility studies and were unable to meet DBP's deadline for final commitments.

Therefore DBP will proceed with a staged expansion, rather than as a large single project.

The initial Stage 5A expansion will service the State's new baseload power station in Kwinana.

Other customers were expected to include Alcoa and Worsley, which have been assessing $1 billion-plus expansion projects at their South West alumina refineries.

However rising material and labour costs have fuelled speculation both companies will defer their projects.

Full announcement below:

DBP update on Stage 5 expansion plans

Dampier Bunbury Pipeline has decided that its Stage 5 expansion of the Dampier to Bunbury Natural Gas Pipeline, to meet the State's growing energy needs, should be developed on a staged basis.

DBP Executive Chairman Stuart Hohnen said DBP had announced in February 2006 that requests had been received from shippers (customers), for a 375TJ/d expansion of the pipeline - comprising 310 TJ/d of full haul and 65 TJ/d of part haul capacity.

This expansion was expected to cost around $1.5 billion, with final commitments required mid 2006. Mr Hohnen said that a number of shippers are still completing feasibility studies and are unable to meet the deadline. As a result DBP has concluded that the most effective and efficient way of expanding the pipeline is to do it progressively, rather than as one large single project.

Construction of the first core component of approximately 110 TJ/d of full haul and 80 TJ/d of part haul capacity - to be known as Stage 5A - is expected to commence in early 2007 for the delivery of new gas in the first half of 2008 to meet shipper requirements.

Mr Hohnen said DBP hoped to be in a position in the third quarter of 2006 to give a formal go-ahead for this work.

"Given the extremely tight deadline to meet initial gas demand from shippers, it is important to proceed with the Stage 5A immediately.

"Stage 5A will be a very significant expansion project which will provide extra capacity for important projects such as Western Australia's new baseload power station at Kwinana.

"The Stage 5A expansion project will increase loads to a similar degree to the current Stage 4 expansion, which is expected to cost about $430 million."

Mr Hohnen said that a number of other significant industrial developments, requiring full haul capacity of approximately 100 TJ/d, were progressing through the feasibility process.

DBP expects to be able to make a decision to proceed with this next component of expansion - to be known as Stage 5B - before the end of calendar 2006. Other industrial developments requiring extra full haul capacity in the order of a further 100 TJ a day - to comprise the Stage 5C expansion - are being progressed for approval during 2007.