Dampier Bunbury Pipeline to have $700m expansion

The owner of the Dampier Bunbury Pipeline has given the go-ahead to a $700 million expansion, its second major undertaking since it took over the project in October 2004.

This expansion, stage 5A of the project, involves the laying of additional pipe alongside the existing pipeline in a process known as looping. Stage 5A comprises ten loops in excess of 570km, with construction expected to commence early next year.

DBP chairman Stuart Hohnen said in a statement that the group's $430 million Stage 4 expansion, comprising 217km of looping and the installation of eight new compressors, was now 90 per cent complete.

The company decided in May this year to undertake the fifth stage of the project in three parts, after a number of shippers (customers)were unable to meet DBP's deadline for final commitments.

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

The timing of stages 5B and 5c is dependant on a number of issues, including the price and availability of gas to support new resource processing and power generation developments.

The full announcement is pasted below

Dampier Bunbury Pipeline today announced the go-ahead for a $700 million expansion of Western Australia's most critical energy infrastructure asset, the Dampier to Bunbury Natural Gas Pipeline.

The expansion of the DBNGP will underpin significant further capital expenditure in power generation and value-added processing in the south-west of the State.

DBP Executive Chairman Stuart Hohnen said the Stage 5A expansion was the second major expansion of the DBNGP since the consortium of owners took over the pipeline in October 2004. As with the Stage 4 expansion, all the additional capacity will be fully contracted to new and existing shippers under long term arrangements.

"Combined, the Stage 4 and Stage 5A expansions represent an investment of about $1.13 billion in the pipeline," said Mr Hohnen.

"This is nearly three times the size of the financial commitment we gave to the State Government and the ACCC when we purchased the pipeline.

"The scale of this investment underlines the importance of securing long-term certainty of competitive gas supplies."

Construction of this latest expansion is expected to begin early next year with the first capacity to be commissioned during the first quarter of 2008, with the balance by the third quarter of the same year. The expansion will increase production by about 100 terajoules per day (TJ/d).

Stage 5A comprises the laying of additional pipe alongside the existing pipeline in a process known as looping. Stage 5A comprises ten loops totaling in excess of 570 km.
Mr Hohnen said the $430 million Stage 4 expansion, comprising 217 km of looping and the installation of eight new compressors, was now 90 per cent complete. When Stage 5A is completed, it will mean that about half the DBNGP will have been duplicated.

Mr Hohnen said the expansion was taking place through long term commercial arrangements with shippers which sit outside the regulatory regime.

Commitments had been obtained from DBP's banking consortium for the debt funds necessary to finance the expansion.

Stage 5A will be the first of a proposed 3 part expansion of the pipeline, known as the Stage 5 expansion. This follows DBP's announcement in May that the most effective way of managing the Stage 5 expansion would be to do it progressively in three stages, rather than as one large single project.

Timing of Stages 5B and 5C is dependant on a range of issues, including the price and availability of gas to support new resource processing and power generation developments.