Failed DBNGP compressor highlights expansion need

A recent compressor failure on the Dampier to Bunbury Natural Gas Pipeline has highlighted the important contribution to the gas supply in the South West of developments driven by junior players such as ARC Energy.

The compressor failure, which came less than a week after the Alinta, Alcoa and DUET consortium took over the $1.86 billion pipeline, forced Arc Energy to cut back some of its gas to customers, while Western Power was forced to use oil and coal-fired generators to avoid power cuts.

The fault also highlighted the need to expand the DBNGP and rekindled fears of a repeat of last summer’s power blackouts.

Arc Energy managing director Eric Streitberg told the Securities Institute of Australia recently that Western Power had been able to cover the shortfall with its non gas-fired generators.

Mr Streitberg said that Arc had been returned to the position of capacity shortfall, similar to what it experienced earlier this year during a summer heatwave, that caused Western Power to impose consumption restrictions on its customers.

“What it [the DBNGP] needs is expansion and the previous owners didn’t have enough funds to expand it,” Mr Streitberg said.

“Everybody is short of gas, we’ve had to cut back on some of our customers,” he said.

However Mr Streitberg said that all of Arc’s fields were “running absolutely flat out” and that the company was “days away” from switching on the new Xyris gas field that would help alleviate gas shortages to Perth.

Arc is expected to make an announcement on the Xyris field this week.

The oil and gas player has been undertaking an aggressive exploration campaign in the Perth Basin – the results of which have been quite successful.

Most of Arc’s gas is shipped to Perth via the Parmelia pipeline with gas contributing one third of Arc’s production and one quarter of its income. Oil accounts for the remainder and Mr Streitberg said the company had benefited significantly from the strong oil prices.

“If the oil price stays anywhere near where it is and our production forecast is met we will have a substantial profit this year,” he said.

“Xyris is particularly welcome as an additional gas supplier to the South West and, together with our other planned gas developments, will make a significant contribution to ensuring both our direct customers and other gas consumers will be assured of gas supplies over the coming summer months.

“Production from Xyris and the other new fields will ensure that there are no more supply restrictions from the Perth Basin.”