Australia looks to develop LNG import industry

Australia is set to get its first LNG import terminal, with a number of proposed terminals under consideration around the country. We take a closer look at the projects and the new construction opportunities available down under. 

For a number of decades now, Australia has been a prolific exporter of liquefied natural gas (LNG) to countries around the world. Australia’s gas fields offshore north Western Australia have been exporting LNG since the late 1980s, while Queensland’s coal seam gas fields have in more recent years joined the ranks of LNG exporters.

However, while Australia has been exporting large quantities of LNG to overseas neighbours, the country – particularly along the eastern seaboard – has been experiencing gas shortages and issues with supply.

NSW currently imports more than 95 per cent of the natural gas it uses from other states; and gas supplies to the Australian east coast market in general have tightened. As a result, natural gas prices have increased, impacting industrial and domestic users. Several recent economic studies have predicted significant future gas shortfalls for NSW within the next few years.

It’s little surprise then that a number of developers are looking at opportunities to build LNG import terminals around the country, to provide a stable supply of gas to the markets experiencing shortfalls. Let’s take a closer look at four of these projects.

Port Kembla Gas Terminal – Australian Industrial Energy

The Port Kembla Gas Terminal (PKGT) can supply more than 75 per cent of NSW annual gas needs and provides a simple, flexible and timely solution to NSW’s gas challenges. Planning approval has been received, and the PKGT has a relatively short construction time of around 14-16 months.

LNG will be sourced from worldwide suppliers and transported by LNG carriers to the Port, where it will be loaded in liquid form onto a floating storage and regasification unit (FSRU). The LNG will be stored and, when needed, converted to gas onboard the FSRU and then inputted, via pipeline, to the NSW gas transmission network.

With a forecast capital cost of around A$250 million, it is estimated that the project will create around 130 to 150 jobs during construction and between 40 to 50 ongoing roles during operations.

Australian Industrial Energy is currently working to secure customer supply contracts and complete post-consent management plans. When finalised, a Final Investment Decision can be made and construction can commence.

In September, the PKGT was placed on the New South Wales Government’s Priority List to be fast-tracked.

The New South Wales Priority List aims to fast-track activities which will support the recovery of the state’s economy during and after the COVID-19 pandemic.

Gas Import Jetty Project – AGL

AGL is proposing to develop a project that would supply imported natural gas into the south-eastern Australian states for industrial, commercial and residential gas customers, meeting a projected domestic gas supply shortfall and improving gas supply certainty from 2024 or earlier.

The gas would be transported as LNG, most likely from overseas, transferred to another ship and converted from liquid form back into gas on that ship and then piped into the Victorian Transmission System (VTS).

The FSRU would be continuously moored at Berth 2 of Crib Point Jetty. Depending on demand, between 12 to 40 LNG ships per year would moor alongside the FSRU at Crib Point to resupply the FSRU with LNG.

The proposed gas import jetty would be connected by a new gas pipeline approximately 57km long, into the VTS, east of Pakenham. The pipeline would be developed and constructed by APA Group.

Geelong Energy Hub – Viva Energy Australia

In June 2020 Viva Energy announced its vision to create the Geelong Energy Hub at the site of its Geelong refinery, located in Corio Bay. Key to this vision is the Viva Energy Gas Terminal, which would include:

• An FSRU to supply a new source of gas for the South-East Australian gas market in response to projected gas shortages
• An extension of the existing Refinery Pier and localised dredging to accommodate the new berth and ship turning
• A new pipeline, approximately 6.5km in length, to take the gas from the terminal to the existing VTS

The pipeline would consist of two sections being an above ground section (~2.5km) from the FSRU to new treatment facilities within the refinery boundary and an underground section (~ 4km) from the treatment facilities to the VTS.

The project is still subject to relevant regulatory and Viva Energy Board approvals.

Outer Harbor Project – Venice Energy

Venice Energy is developing an LNG-to-power industry in South Australia.

Stage 1 of the project consists of a new LNG import terminal at Outer Harbor, approximately 14kmfrom South Australia’s capital, Adelaide. 

Construction of the gas project is expected to begin in mid 2021, and will create more than 350 construction jobs and around 100 new permanent jobs following commissioning of an LNG import facility in Port Adelaide.

The terminal will feature two new wharves, an FSRU with up to 160PJ p.a. capacity, cryogenic pipeline transfer system and nitrogen injection facilities on-site.

The terminal will connect directly into the state’s gas network, with the Moomba to Adelaide Pipeline System and South-East Australia pipeline within 600m of the LNG terminal.

Delivery of completed project is expected to cost up to A$200 million, and government approvals and construction commencement are expected in Q1-2 of 2021.

An opportunity for investment

In its Federal Budget, released in October 2020, the Australian Government articulated a strong plan to develop new gas infrastructure and sources of supply to support the country’s recovery from the economic impacts of COVID-19.

With Australia’s gas industry being earmarked as a pivotal component of Australia’s economic recovery, and with the full support of the Federal Government, now is an opportune time to get involved in the Australian gas market. 

Powered Australia has the experience and expertise needed to help companies reach new levels of sales performance in the Australian oil and gas, resources, and mining sectors. Powered Australia is here for a confidential discussion about the opportunities down under has to offer.