Planning proceeds for Albany gas pipeline

The state government has formally commenced planning for a new gas pipeline between Bunbury and Albany, as negotiations continue with Grange Resources, whose Southdown iron ore project will be critical to the pipeline's viability.

Engineering group GHD was today named as the successful proponent to determine route alignment options for the Bunbury to Albany Gas Pipeline corridor.

Regional Development and Lands Minister Brendon Grylls said in a statement the awarding of the tender brought the region a step closer to a secure gas supply which would unlock future growth potential for communities along the route.

A key factor in the pipeline’s viability will be Grange’s proposed $2.57 billion Southdown iron ore project, which involves construction of a new mine just north of Albany and an energy-intensive iron concentrator.

Investor presentations by Grange have previously focused on an alternative energy supply, involving construction of a 330kv transmission line from the Muja power station near Collie. A pre-feasibilty study, completed in May, was also based on a new tranmission line.

However Grange chief executive Russell Clark said in a statement that “a power solution for Southdown is yet to be determined”.

“We support a solution that is affordable and meets project timelines, which may be the gas pipeline or constructing a Western Power line to site from the Muja substation, near Collie,” he said.

Mr Clark said Grange and its joint venture partner Sojitz Corporation have sought government responses on several factors affecting the gas pipeline’s ability to service the Southdown mine.

“These include the availability of gas domestically, the project timeline, the price per unit of gas and the certainty of gas supply,” he said.

“We eagerly await these responses before a more certain position on the matter can be determined.

“The source of power for the Southdown mine has a major impact on company decisions regarding the project progressing.

“It is hoped the State government can support a viable solution for all parties involved.”

Grange and Sojitz, which last week appointed Standard Chartered Bank as their financial adviser, are aiming to complete a definitive feasibility study for the project in December 2011.

That puts it well ahead of the pipeline study, which is due to be finalised and presented to the state government in March 2012.

Mr Grylls did not mention Southdown in his statement, simply noting that GHD will assess existing and potential energy demands in the South West and Great Southern regions and determine route alignment options for the corridor.

These options will take into account social, economic, environmental and engineering considerations as well as opportunities to link the corridor with other state government initiatives in the south of the State, such as the Regional Centres Development Plan (SuperTowns), his statement said.

GHD will also undertake extensive stakeholder consultation to ensure the alignment for the corridor best serves the interests of all involved.

"The Bunbury to Albany Gas Pipeline project will contribute greatly to the future economic and social growth of the south of our State and I look forward to seeing it unfold,” Mr Grylls said.