01/08/2008 - 10:30

Varanus back online quicker than planned

01/08/2008 - 10:30

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Apache Energy Ltd delivered good news on the gas criris today when it said partial production from its Varanus Island gas plant will resume ahead of schedule but the Chamber of Commerce and Industry WA said the state is not "out of the woods".

Varanus back online quicker than planned


Apache Energy Ltd delivered good news on the gas criris today when it said partial production from its Varanus Island gas plant will resume ahead of schedule but the Chamber of Commerce and Industry WA said the state is not "out of the woods".

CCI said WA's energy system remains fragile despite the increased gas production by other suppliers, recommissioning of several coal fired power stations and the use of costly alternative fuels such as diesel.

"Business and industry across the state that rely on gas as a primary fuel source will continue to operate in a constrained market until full supply is restored," CCI chief executive James Pearson said.

"The gas crisis remains one of the most significant challenges facing WA business and the local economy in many years."

The comments follow an earlier announcement by Apache that an initial production rate of 120 terajoules per day will be available to customers in the next few days, ahead of the original August 15 timeline.

Apache's Varanus plant handles about 30 per cent of WA's domestic natural gas requirements and its customers include, BHP Billiton Ltd, Rio Tinto Ltd, Newcrest Mining Ltd and Alumina Ltd.

The explosion forced some mining companies in WA to temporarily close some operations and other miners to use expensive diesel to power their mines.

"Apache understands the hardship that the Varanus Island incident has caused and thank everyone for their patience during this difficult time," managing director Tim Wall said in a statement.

Apache said gas output would increase to 200 mmcf or 240 Tj per day "in coming weeks" before full production of 300 mmcf or 350 Tj per day is achieved by the end of the year.

The WA government says the gas crisis will cost the state about $1.8 billion in lost revenue over five years, while the Chamber of Commerce and Industry says the cost to the state's economy was $2.4 billion.

Alumina has booked a $7 million loss in the month of June as a result of the incident and is expecting a further financial impact of $31 million in the three months to September 30.

Newcrest managed to secure interim gas supply for its Telfer mine from the Woodside Petroleum Ltd-operated North West Shelf venture and has estimated the outage will cost the company about $34.3 million.

WA's gas supplies were dramatically reduced in January after Woodside was forced to shut-down the Karratha gas plant, which is part of the North West Shelf venture, after an electrical fault.

Meanwhile Premier Alan Carpenter has not ruled out a royal commission into the Varanus Island gas crisis as the facility's operator Apache Energy said partial production will resume earlier than expected.

Responding to a question put to him at a press conference today and calls by the state opposition for an inquiry, Mr Carpenter said if there needed to be a broader investigation then the government will consider it.











 

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