Miners hit as Alinta warns on gas crisis

Gas retailer Alinta warned today that the state's gas crisis could worsen, as the resources sector said many of its members would be affected and the state government decided to re-open a mothballed coal power station.

Alinta said the onset of colder weather could compound the current problem, which has added to financial problems facing its owner, the Babcock & Brown group (see separate article).

In a statement, Alinta said "indications are that, with the arrival of colder weather, energy demand, and gas demand specifically, may increase significantly".

"This increase would place additional pressure on businesses currently most affected by the energy shortage."

The wide impact of the gas crisis was highlighted by a Chamber of Minerals and Energy of WA survey, which concluded that very few companies in the resources sector have been left unscathed by the gas outage.

70 per cent of CME's 46 production members responded to the survey which indicated that:

- Over one quarter of companies do not have the capacity to substitute diesel for gas

- Over 30 per cent of companies have ordered extra diesel

- Over 40 per cent of companies are planning or implementing altered staffing arrangements such as bringing forward annual leave, training, maintenance and deployment to other projects

- Nearly half of responding companies report that while they are not affected in the short term, there will be consequences in the longer term

This outage is affecting the resources sector in many ways according to CME Chief Executive, Reg Howard-Smith.

"Where possible, resource companies are using more expensive liquid fuels in place of gas," Mr Howard-Smith said.

"For a significant proportion of companies however, this is not an option, and minerals processing operations have been wound down or suspended entirely," he said.

"This clearly has major implications for staffing, and for the many businesses that supply goods and services to the resources sector.

"This survey reinforces the severe impact of this incident, and the fact that as the gas shortage continues, a cascade of adverse consequence will occur.

"The survey results will help inform the State's Gas Supply Co-ordination Group, and underline the urgency of implementing measures to mitigate the effects of the outage.

"We are supportive of efforts by the Government to secure alternative gas supplies, using alternate energy sources to make more gas available, and urging energy conservation by the whole community."

Meanwhile, the government has announced that a Collie power station that was decommissioned last year is to be made ready for service in response to the current gas shortage.

Energy Minister Francis Logan has instructed Verve Energy to prepare the coal-fired Muja AB power station for a return to possible service, as a back-up for Western Australia's electricity supply.

Mr Logan said the move would allow Verve Energy to use more coal to generate electricity, allowing gas to be on-passed to generators and industries that needed it.

Three of Muja AB's units would be recommissioned. The fourth unit was not considered operable and would be used for spare parts.

The Minister said the first 60MW unit would take six weeks to be operational, with the restoration process expected to cost $1.3million.

He said it would enable 25 terajoules of gas to become available each day.

The second and third units would be available two or three weeks later.

"It is not an easy process to bring decommissioned power stations back into service," he said.

"Verve Energy needs to follow an ordered and measured approach to ensure these units are reliable.

"These units are old and not as environmentally friendly as new generators. However, the State is facing a significant gas shortage and we need to look at all avenues.

"Muja AB is still licensed to operate, but I have asked Verve Energy to try and burn as much biomass as possible and this may need a licence variation. The Department of Environment and Conservation will be kept informed about this matter."