Developing Australasia’s offshore gas - Gas Todaygastoday.com.au/pdfs/gastoday_may08_web.pdf ·...

Issue 4May 2008

• The magazine for Australia’s natural gas industry •

Firing up CSG

Martin Ferguson interview

DevelopingAustralasia’soffshore gas

TOGETHER PROVIDING:• Pipeline Project Development & Construction

• Maintenance & Repairs

• Compressor & Facilities Installation

• Pipe Spool Fabrication Works

• Piping Installation & High Pressure Welding

• Water Process & Petro-Chemical Industry Services

SERVICING PROCESS INDUSTRIES IN:

OIL • GAS • POWER • WATER

In 2008 Ackroyd Engineering Services joined Diversifi ed Construction Corporation...

For more information phone 07 3292 0800 or see us at www.divcon.com.au

Part of the WDS Group

DEUTZ Power systems Australia Pty. Ltd. 21 McDonalds Lane Mulgrave, VIC, 3170 Phone +613 9262 3000 Fax +613 9262 3033 www.deutzpowersystems.com

concentrated energy

Our world is full of energy –and we understand how to use it. For we are one of the largest independent producers of gasengines and equipment worldwide.

With our complete power spectrum from 180 to 4,000 kW, we offer you tailor-made, efficient, and economical equipment for con-verting fossil and non-fossil fuels.

You can, of course, also make use of our know-how in calcu-

lating feasibility studies, plan-ning facilities, and implementing entire

projects.

And so when your goal is to make the most of your energy, talk to the best.

C

M

Y

CM

MY

CY

CMY

K

ECOGen_Deutz.pdf 16/1/08 2:33:49 PM

Great Southern Press Pty Ltd A.C.N. 005 716 825(A.B.N. 28 096 872 004)GPO Box 4967 Melbourne Vic 3001 AustraliaTel: +61 3 9248 5100Fax: +61 3 9602 [email protected] Editor: Sarah RobertsonJournalists: Maryam Jahanshahi, Kate MonypennySales Representatives: David Marsh, Lucy NguyenDesign Manager: Emily BrowneDesigner: Michelle Bottger Office Manager: Stephanie FieldenPublisher: Chris Bland ISSN: 1832-0562

GreatSouthern

Press

Issue4May2008

•themagazineforAustralia’snaturalgasindustry•

Firing up CSG

Martin Ferguson interview

CSGDevelopingAustralasia’soffshoregas

REGULARS

4 Editor'sComment5 Welcome60 Index

NEWS

6 NewsinBrief10 Climatechangeontheagenda12 NaturalGas-highon thenationalagenda14 Barry-thehaplessfaceofa seriousgascampaign

ENERGyNEtWoRkS

26 Nationalenergysafety ruleskeytothefuture27 GasSeminar-Canberra2008

The magazine for Australia's natural gas industry

2 GAS Today / May 2008

CoALSEAMGAS

16 CSG-firingupAustralia'sgas industry20 LucasEnergy-tappingNSWCSG22 Monitoringsolutions forthegasindustry24 PipelinebusinessmovesintoCSG

PERSPECtIVES

25 CSGmaygivenewwingstothe Australianeconomy

GAS Today / May 2008

GAS Today / May 2008GAS Today / May 2008GAS Today / May 2008GAS Today / May 2008GAS Today / May 2008

May 2008/Issue 4

PRoJECtS

54 PlutoLNGProject56 kupeGasProject58 NorthRankin-2Project

EVENtS

34 APPEA2008showsgasis energisingchange59 CalendarofEvents

tRANSMISSIoN

48 NGERS-implicationsforthe transmissionsector49 youngPipelinersForum- developingthefuture,today

3GAS Today / May 2008

AGIt

38 AGIt2008Activities

AGA

39 AGAlaunchescylinder certificationscheme

tEChNoLoGy

42 Actuatorsforcriticalmainline naturalgasvalves45 Safeandpracticalfieldcalibration46 ProtectingSCADAsystems

REGIoNREVIEW

50 SellinggastoNewZealand's massmarket52 ReviewofthetaranakiBasin

PoWERGENERAtIoN

28 DarlingDowns-Australia's biggestcombined-cycle powerstation30 CeramicFuelCells- complementingthegassector32 Gasturbineasset managementresearch

SEAAoC

36 Gasthetalkofthetown

CoMMERCIALSERVICES

40 AnalysingAustralia’sgasindustry41 CSG-nextgenerationlegalissues


Almost half way through 2008, Australia’s natural gas industry is ramping up and engaging in

debate and discussions about Australia’s future energy security supply and climate change. With plentiful resources, governments, investors and consumers are recognising that gas can take us into a carbon constrained future and is an important part of Australia’s future energy mix. The issues around this are raised and discussed in this edition of Gas Today.

A recent highlight for the exploration and production industry has been the extension of Australia’s jurisdiction over the potential resources held in an additional 2.5 million square kilometres of seabed and continental shelf. Only time will tell what gas these unexplored areas will produce but the industry clearly has the support of the Australian Government with 35 offshore areas recently released.

In the lead up to the annual SEAAOC conference in Darwin in July, this issue looks at several offshore gas developments, including Kupe and North Rankin gas projects as well as developments in New Zealand’s Taranaki Basin.

With climate change front and centre on the national agenda, coal seam gas (CSG) is also a major focus of this issue. An article, ‘Firing up Australia’s CSG’ reviews the rapid development of CSG in the past six months and the question of domestic supply versus export opportunities in the form of LNG is discussed. An interview

with Lucas Energy Managing Director Paul Bilston also raises questions about CSG development outside Queensland and Hopgood Ganim Lawyers discuss the key issues facing the CSG industry.

Key developments on Australia’s response to climate change are looked at in an article on the Garnaut Climate Change Review’s Interim Report and discussion paper on an Australian emissions trading scheme. We also look at campaigns promoting the use of natural gas in the home as a lower-emissions fuel underway in New South Wales and New Zealand.

Major developments in relevant policy are also covered in an interview with Federal Minister for Resources and Energy, the Hon Martin Ferguson, and the major issues addressed at the 2008 APPEA Conference and Exhibition.

Some of the technological developments across the industry in this edition include gas metering, flow control equipment and the launch of the Otway Basin carbon geosequestration project. There is also an article on the importance of securing SCADA systems.

Finally, in March 2009 Gas Today will hold a premier event for the Australia’s natural gas industry in Brisbane. I encourage you to visit the website www.futuregas.com.au to register your interest for this conference, which seeks to connect and promote the interests of Australia’s entire natural gas industry.

Editor's Comment

Sarah RobertsonAssociate Editor


‘Clean’ and ‘green’ have become the energy buzzwords in Australia. They ring in our ears with

increasing frequency.With six children starting to make their

way in the world I, too, want a future where we can satisfy our ever more voracious energy needs with ‘clean, green’ fuel which keeps our planet healthy.

But from where we stand now, clean, green, renewable energy cannot come quickly enough for our needs. Already this year, oil prices have reached as high as $US 111 ($119.95) a barrel. India, to name one example, has said it must increase power generation six-fold in the next 24 years to sustain its economic growth.

Wind, wave and solar power have years of research, development and funding ahead before they become economically viable even in first world countries.

Natural gas is acknowledged as the fuel of choice; the cleanest, greenest transitional resource to carry us from our love-hate fossil fuel addiction toward renewable energy.

Gas-fired power stations emit half the greenhouse pollutants of their coal-fired predecessors. Queensland Gas Company (QGC) believes in gas-fired generation; we are building our own Condamine Power Station in western Queensland.

Gas is not the fuel of the future. Gas is the fuel of Today.

The Australian Coal Seam Gas Council is a forum for explorers, producers and consultants in the CSG industry. It promotes understanding of the issues and shines a light on the way forward. Coal seam gas contains just 3 per cent carbon dioxide – and even that small quantity can

be pumped back underground to release more methane.

Fortunately, Australia is blessed with abundant supplies of coal seam gas. At QGC’s acreage in Queensland’s Surat Basin, we are intensifying our exploration and drilling program to deliver, with our partner BG Group, at least 190 PJ of gas annually to be converted to LNG and exported to the world.

QGC and BG Group believe our acreage has the potential to deliver 7,000 to 10,000 PJ of 2P (proven and probable) reserves, which is bigger than the remaining reserves of Bass Strait by a long mile. We can do this while maintaining our commitments to the domestic market.

We are also fortunate that coal seam gas is so plentiful here in Queensland, within a few hours’ drive of beaches and near towns and cities. For industry workers, the coming jobs surge here has to be a more attractive option than being dropped on a wave-battered ocean rig or a remote desert site.

The worldwide market for LNG is growing steadily, with global demand expected to more than double from 150 million tonnes per annum (MMt/a) to 400 MMt/a by 2015.

This expanding market provides a strong and sustainable outlet for Australia’s coal seam gas producers. It makes available appropriate pricing to enable the tapping of larger gas reserves, allowing the industry to realise its potential sooner.

What we, as an industry, need to do now is seize the day. Until now, coal seam gas has been constrained to domestic markets. The horizon is in view and we need to build the bridges to reach it.

To access these markets and make the most of this remarkable resource, the Australian Coal Seam Gas industry must address the lack of infrastructure.

We need to build gas pipelines, port facilities, LNG liquefaction and regasification plants. Our ability to handle the growing demand for LNG depends on our initiative in putting the infrastructure in place.

Coal seam gas makes sense, environmentally and economically. LNG exports make sense, bringing the prices which make our enormous reserves economic.

We have today’s fuel of choice and the world is knocking on Australia’s door. The time to act is now.

Richard CotteeAustralian Coal Seam Gas

Council President

Welcome

Richard Cottee is President of the Australian Coal Seam

Gas Council and has been Managing Director of QGC since October 2002, taking the company from a junior

explorer to one of Australia’s foremost integrated energy

companies.

Last year, the Australian Institute of Management

named Mr Cottee its Queensland Professional

Manager of the Year and the Australian Business Arts

Foundation presented QGC with its Community Award for

Drama at the Gasfields, an

initiative which took musical drama to regional Australia.

Mr Cottee, a fluent Japanese speaker, trained as a lawyer at the University of Queensland, Brisbane, but gravitated away

from law and toward the energy industry.

Before taking over QGC, he headed up European

operations for US energy giant NRG and was Chief

Executive Officer of CS Energy in Queensland where he

double the profits and triples the asset base of the company

between 1998 and 2001.

Richard Cottee


ExplorationandproductionAustralia’s offshore area increased

The United Nations Commission on the Limits of the Continental Shelf in New York has confirmed Australia’s jurisdiction over an additional 2.5 million sq km of seabed,

giving Australia the rights to gas resources underneath the seabed.

The Commission’s findings confirm the location of the outer limit of Australia’s continental shelf in nine distinct marine regions (as shown by the green areas on the map) and Australia’s entitlement to large areas of shelf beyond 200 nautical miles.

The decision grants Australia the rights to what exists on and under the seabed including gas and oil resources.

Federal Minister for Resources and Energy Martin Ferguson said “This is a major boost to Australia’s offshore resource potential.

“It demonstrates that Australia’s effective engagement in law of the sea matters delivers results. The Government will move quickly to proclaim the outer limits of the Australian continental shelf into law on the basis of the recommendations of the Commission.”

Australian Petroleum Production & Exploration Association (APPEA) chief executive Belinda Robinson said, “With more area to explore for new oil and gas reserves comes more promise. We really know very little about the petroleum prospectivity of these areas and increasing that knowledge will be challenging as will encouraging explorers into these areas, but it is a very exciting prospect.”

Reindeer gas project sanctioned

Santos has announced the Final Investment Decision for the Reindeer Gas Project, located in offshore Western Australia. Reindeer gas will be produced via an unmanned,

minimum facility wellhead platform located in 65 metres of water. Gas and liquids will be exported from the platform to a new onshore gas processing plant via a single 105 kilometre pipeline. The processing plant, to be located at Devil Creek, will have an unspared capacity of 215 terajoules per day (TJ/d) and will deliver sales gas and stabilised condensate. Sales gas will be compressed and exported to the Western Australian domestic gas market via the Dampier - Bunbury Natural Gas Pipeline.

The Reindeer field proven and probable reserves are estimated at approximately 485 PJ of sales gas. Santos expects first gas to be produced by the end of 2010.

Santos Chief Executive Officer David Knox said the formal approval of the project highlights the positive impacts of bringing a significant new source of gas supply into the rapidly growing Western Australian market. Santos has a 45 per cent interest in the Reindeer Gas Project. The remaining 55 per cent interest is held by the operator, Apache Northwest.

transmissionDiversified to assume AES

Diversified Construction Corporation will assume the management and responsibility for Ackroyd Engineering Services (AES) after an agreement that

saw the Walter Diversified Services (WDS) Group acquire 80 per cent of AES shares.

Diversified said that the acquisition will add another dimension to its specialist pipeline capabilities in the water and oil and gas sector and allow an expanded range of services to be offered to existing and new clients.

WDS Group Managing Director Garry Ash said that the recently purchased stake in AES has consolidated WDS subsidiary Diversified Construction Corporation into a specialist mechanical engineering and pipe fabrication service.

AES provides specialist fabrication and site services to the petrochemical and the water processing industries. The company’s head office is in Tweed Heads, NSW, with a fabrication workshop in Brisbane. Site services include the mechanical installation of equipment such as gas compressors, turbines and water treatment plants. The company also provides crews for long term construction projects, such as the Braemar Power Station, and for plant shutdown and maintenance work. Rohan Ackroyd will continue as AES General Manager.

DBNGP to expand once more

Dampier Bunbury Pipeline (DBP) – owner of the Dampier to Bunbury Natural Gas Pipeline (DBNGP) – has completed its $660 million Stage 5A expansion,

while also announcing that it will increase the size of its previously announced Stage 5A(2) expansion project.

Construction of the Stage 5A expansion, which increases firm full haul capacity by approximately 100 TJ/d, commenced in February 2007 and involved the installation of 570 km of parallel pipe effectively duplicating 50 per cent of the DBNGP mainline.

The company said that the decision to increase the Stage 5A(2) expansion came after receiving additional firm capacity requests from existing and prospective shippers, with new firm capacity requests totalling approximately 75 TJ/d of firm full haul capacity and 125 TJ/d of part haul capacity required from 2010.

The increased expansion project has an anticipated cost of $700 million and is now known as Stage 5B. A final decision to proceed remains subject to finance and board approval and construction is planned to begin in 2009.

The DBNGP connects the Carnarvon Basin on Western Australia’s Northwest Shelf with industrial, commercial and residential customers in Perth and the surrounding region.

GenerationContact signs contract for gas-fired peaks

Contact Energy has signed an agreement with General Electric (GE) to purchase two 100 megawatt (MW) LMS100 fast-start gas-fired peaking units to support increasing

levels of renewable electricity generation in New Zealand. The units will be installed on the site of Contact’s currently disused Stratford power station and are expected to be in service before the winter of 2010.

Contact also signed a contract with United Group (NZ) to

News in Brief

For the latest coal seam gas news turn to page 16.


project, manage, engineer, and install the two peaking units, and procure and install the balance of plant required to complete the project. The project will cost approximately $NZ250 million to complete and will have 200 MW of highly efficient gas-fired peaking capacity.

Bilfinger to build gas-fired power station in Perth

Bilfinger Berger Services has been awarded a contract to build the Newgen Neerabup Gas-fired Power Station in Perth, Western Australia.

The company’s role in the project will involve the design, supply, construction, installation and testing of the balance of plant for the 330 MW gas-fired power station. Bilfinger Managing Director Mark Elliott said the power station is new for the region and will engage local labour for the construction, operation, maintenance and service of the plant.

The project will be undertaken in a tripartite arrangement that has been established with Newgen Neerabup Partnership and Power Island Contractor (Siemens) for the development of the project. The project is expected to be completed by September 2009.

PolicyCOAG to review upstream gas regulation

COAG has agreed that the Productivity Commission will undertake a review on the regulation of crude oil and natural gas projects that involve more than

one jurisdiction and report back to COAG by April 2009.APPEA chief executive Belinda Robinson welcomed the

decision, saying the outcome is a breath of fresh air that holds real promise of increasing Australia’s prosperity through a more cooperative approach to regulation and project approvals.

“By committing to reform the regulation and approvals processes for upstream oil and gas projects Australian governments are hanging out a shingle that says ‘we are open for oil and gas business'," she said.

technology,R&DNew gas detector launched

BW Technologies by Honeywell has introduced the GasAlertMicroClip, a multi-sensor confined space gas detector.

Simultaneously displaying O2, H2S, CO2 and percentage LEL, the GasAlertMicroClip offers full-function, multi-gas instrument performance with the compact size and ease-of-use of a disposable detector. The size, long life and high specificity of the sensors are central to the compact yet functional design. Weighing 160 grams the gas detector features field-selectable user options allowing customisation to virtually any application.

C02CRC project launched

The Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC) has launched the CO2CRC Otway Project – the first carbon dioxide storage or geosequestration

project in the southern hemisphere. The Otway Project, located in south western Victoria, involves

the extraction of 100,000 tonnes of carbon dioxide and natural gas from the Buttress-1 gas well. The gas will then be compressed and piped to the deeper depleted Naylor gas field via a 2.35 km stainless steel pipeline.

CO2CRC Chief Executive Peter Cook said “The CO2CRC Otway


Project is one of the few projects currently underway around the world to safely and securely store carbon dioxide, the most abundant greenhouse gas after water vapour. There is a need for many more projects of this type and at a larger scale.”

The Victorian Government said it will look at the results of the Otway Project to confirm that carbon capture and storage can play a major part in achieving deep cuts to Victorian greenhouse gas emissions.

Chevron and UWA partner up

Chevron has selected the University of Western Australia (UWA) to join its worldwide university partnership program, which is aimed at developing new technologies and people

required to meet the world's growing energy needs. Chevron will provide UWA with $2.3 million over three years

to help fund a Chair in Natural Gas Process Engineering, two postdoctoral appointments and two PhD scholarships.

The partnership will focus on gas processing, providing professional development to meet industry needs and complementing the work of the Western Australian Energy Research Alliance, the Chevron Energy Technology Centre and the Australian Gas Centre.

CSIRO and Petronas to boost researchResearch into oil and gas exploration and production and wider

energy technologies has received a funding boost following the signing of a Strategic Alliance Agreement between CSIRO and the national petroleum company of Malaysia, Petronas.

The agreement covers research into oil and gas exploration, petroleum exploration and production, advanced materials, clean coal energy and renewable energy.

A number of the collaborative research projects form part of the new Australian Gas Centre (AusGas) initiative developed by CSIRO with the WA Energy Research Alliance.

World’s biggest BBQ shows benefits of cooking with gas

Mercury Energy unveiled the World’s Biggest Gas BBQ at Auckland’s annual Teddy Bear’s Picnic to celebrate National Children’s Day. The 60 foot long gas BBQ sizzled with more than 13,500 sausages, demonstrating the benefits of cooking with natural gas.

Mercury Energy Retail Operations Manager Richard De Luca said people may not be aware of the cost efficiency and environmental benefits of cooking with natural gas.

A 2007 study by the New Zealand Centre for Advanced Engineering comparing identical gas and electrical domestic cookware found that gas provided the same cooking service at nearly half the cost of electricity, and at approximately 65 per cent less carbon emissions than electric appliances.

fill your roles

Global Recruitment


Climate change is not a problematic phrase in the gas industry but a problem for which the industry

holds a ready solution – natural gas. Generating power from natural gas produces only 30-50 per cent of the carbon dioxide emissions produced by current coal power generation technologies, as well as using up to 40 per cent less water and Australia has it in abundance.

The place of natural gas in a carbon constrained world has been trumpeted loud and clear. Federal Minister for Resources and Energy Martin Ferguson has committed to supporting the industry. Mr Ferguson said recently that while Australia is oil challenged, it is a world-class gas province and that the gas sector is a key part of the nation’s future. Moreover, the industry’s peak bodies, the Australian Petroleum & Production Association (APPEA) and the Australian Pipeline Industry Association (APIA), have committed to working with governments to address the issue of climate change and ensure the industry’s consultation and involvement.

Garnaut’s Interim ReportSince February this year, the Garnaut

Climate Change Review has released the Interim Report on Climate Change and an Emissions Trading Scheme discussion paper, with the Review’s draft report is due to be released at the end of June. Professor Garnaut has sent a stern warning to Australian Federal, State and Territory Governments about the need to commit to ambitious targets and mitigation efforts and take bold action, beginning now.

According to the interim report Australia’s interest in adopting “a strong and effective position on climate change mitigation” lies in its position as a nation that can do exceptionally well in a world

of comprehensive global mitigation efforts whilst being extremely sensitive to the effects of unmitigated climate change.

Professor Garnaut urged governments to promote strong global action on climate change, highlighting that comprehensive global efforts to reduce emissions will play to Australia’s strengths. He said Australia has many resources and skills that will allow it to convert strong global action into an economic opportunity, including Australia’s position among the world’s largest exporters of uranium and natural gas, and its rich renewable energy resources.

An Australian ETSCertainty is a key issue for the energy

industry and with the turn to gas as a ready interim solution, gas industry’s stakeholders have every reason to want answers to lingering questions. High on the list is the national emissions trading scheme (ETS), which the Federal Government has said will be in place by 2010.

Professor Ross Garnaut has said the introduction of an Australian ETS signals the opportunity for profound, long-term structural change for Australia. In the ETS discussion paper, released in late March, Professor Garnaut said an ETS will be the centre piece of Australia’s climate change policy and can help build a more resilient economy for the long term.

The paper argues for the need to design the scheme on the basis that it will ultimately be part of a global agreement on greenhouse gas mitigation. It supports the auctioning of all permits, arguing that any increase in the price of goods or services, such as energy, will not be prevented through the free allocation of permits.

The industry’s responseAPIA has responded to Garnaut’s

interim report stating that earlier greenhouse gas emissions reduction targets can be addressed if increased use of natural gas is introduced into the energy mix sooner rather than later.

APIA Chief Executive Cheryl Cartwright has called for the introduction of a cleaner energy target as part of the Government’s proposed mandatory renewable energy target (MRET), allowing energy producers to use natural gas as part of their range of clean energy options. She said that an MRET that includes a clean energy target would still encourage development and use of renewable energy, but would also allow for the increased use of natural gas.

APIA Policy Adviser Danielle Kellahan has said that it is clear that further investment in gas transmission and carbon dioxide pipelines will be important to the efficient achievement of any government emissions target. APIA has recommended that the Government ensure that there are appropriate policies in place in order to encourage private sector investment in natural gas transmission, including reduced regulatory risk to major investments.

Climate change is also high on APPEA’s agenda. The peak body has committed to reducing the upstream industry’s environmental footprint, and is developing a new code of environmental practice by October this year.

APPEA Chief Executive Belinda Robinson has said that the Australian natural gas industry could help avoid 180 million tonnes of global greenhouse gas emissions per year by 2017 if it meets its aspirational production targets for LNG and domestic gas. These targets include tripling LNG capacity to the Asia-Pacific region and having 70 per cent of all new power stations gas-fired by 2017.

Ms Robinson said that the industry needs to think about more than climate change policy. She said questions about the future should address future opportunities and where the Australian oil and gas sector is placed in a post-emissions trading world.

Australia’s gas industry representatives are championing natural gas as the low emissions resource that will lead Australia and the industry into a carbon constrained, environmentally aware and sustainable future.

Climate change on the agenda

Jump to page 48 for APIA's response to Garnaut's ETS discussion paper.

The First Choice For Gas Power Generation

Clarke Energy Australia Pty Ltd - 2-4 Stirling Street - Thebarton - SA 5031

Tel: +61 (0)8 8290 2100 Fax: +61 (0)8 8443 5848

www.clarke-energy.com

Clarke Energy is a leading Energy Systems Company offering a wide

range of gas powered generation, gas engineering and water treatment

solutions. From the supply of equipment only, through to design,

construction and commissioning, together with lifetime operation and

maintenance, Clarke Energy are able to provide a ’Total Solution’ for

most applications.

Over 1,500MW of installed GE Jenbacher capacity has been installed

within the Clarke Energy territories over the last 10 years, with over half

of this under long term commercial operation and maintenance contracts.

Clarke Energy is also the exclusive Australian and UK distributor of the

Haase Energietechnik range of gas engineering systems, including flare

stacks and gas booster units. Purpose built Haase high temperature flare

stacks are fully enclosed and are virtually maintenance free.

The dedicated team of Clarke Energy Engineers, combined with the

support and backup of GE Jenbacher and HAASE, provide total solutions

for Natural Gas, Flare Gas, Sewage Gas, Coal Mine Methane and

Combined Heat & Power (CHP) applications.

These partnerships with world leading manufacturers along with an

unrivalled quality of service and support have allowed the Clarke Group

to lead the way for Gas Energy Solutions.

Gas To Energy Solutions


The Hon Martin Ferguson is clearly excited about his role as Minister for Resources and Energy. As

he put it recently at the Australian Petroleum Production & Exploration Association (APPEA) conference in Perth “resources and energy are the engine room of the Australian economy today” and developing Australia’s natural gas resources is high on his department’s agenda. Overall, the Minister thinks that Australia’s energy future is bright and secure.

“I think a lot of nations look at Australia with envy,” he says. “We’re very lucky; we’re well endowed and extremely rich in energy resources.”

A balancing act – investment, export and domestic markets

At the same time, the Minister recognises that his task to implement the right policy and regulatory settings is a challenging one.

Primary energy consumption in Australia is expected to increase at an average annual rate of 1.6 per cent between now and 2030. At the same time liquefied natural gas (LNG) production and exports have ramped up in Western Australia, and with Gladstone’s LNG developments in Queensland there is great opportunity for the east coast. Mr Ferguson recognises the complexity of balancing domestic gas supply security while encouraging foreign investment.

“Our energy future looks good both on the export and domestic fronts but requires government leadership working with individual companies and peak organisations to make sure we get a framework in place which guarantees investment in Australia so that our resources are not left stranded,” he says.

“We’ve got to not only be committed

to exports and new exploration opportunities, but also make sure we guarantee Australia’s energy security.”

As one of the world’s ‘energy superpowers’, Mr Ferguson has said that Australia is placed front and centre in a debate about energy security. The solution, he says, lies in choosing the right pathway to energy security – through open and transparent global markets for resources and energy trade and investment.

A key component of this framework involves encouraging investment in exploration and production, particularly

in new frontiers. Mr Ferguson has backed this with action, with seven of the 35 areas released in the 2008 Acreage Release designated frontier areas. However the Minister has said that key to getting more gas projects off the ground is creating partnerships between government and industry.

“This is an enormous challenge in an escalating cost and tightening investment and labour environment,” the Minister said recently. “But the rapidly growing LNG market in the Asia Pacific – and the Indian rim – will not wait for us.”

Australia has to ramp up exploration and production, whether that be through Australian or overseas investment. The Minister has said his department will be ‘rigorously’ applying the commerciality test to retention lease renewals and conducting a review of the retention lease system. In short, companies cannot just sit on their laurels and wait for foreign investment since acreage is in demand.

However the Minister highlights a number of broader barriers to accelerated growth in the gas industry, chief among them being infrastructure and skills and training.

“There is so much investment [potential] on the horizon at the moment, that if we don’t fix these issues, some of our resources including the petroleum industry are going to be supplanted, investment will go elsewhere, and once you miss out on that opportunity, you’re playing catch up for the rest of your life. We just cannot afford to lose those all that investment,” he explains.

He adds that the cost of investing in Australia is now more expensive than it should be, because of infrastructure and skills shortages. In view of this, he recently congratulated APPEA for its National Skills Shortage Strategy, directed at increasing training and employment opportunities for Indigenous Australians as well as women and mature age personnel.

“While the focus is often on governments to resolve the challenges faced by the industry,” he told APPEA 2008 conference delegates, “the reality is it requires a mighty – and constructive – partnership between us.”

Governance and minimising red tape

Acknowledging some concern over the burden of unnecessary red tape, over-regulation or central planning, Mr Ferguson is clear about the role of government in industry – governing

Since the Hon Martin Ferguson has taken office as the Federal Minister for Resources and Energy, gas has been elevated to prime position on the national energy agenda. Gas Today spoke with Mr Ferguson about the exciting and prosperous years ahead for Australia’s natural gas industry.

Natural gas – high on the national agenda

A lot of nations look at Australia with envy. We’re very lucky; we’re well endowed and extremely rich in energy resources.


Essential boardroom attirefor managers who don’t

choose a FlotechCompression Solution

Your board relies on you toperform to your higheststandards. As an expert in yourown field, why not takeadvantage of Flotech’s globalexperience as a quality supplierof gas compression packages?

Flotech will help protect yourinvestment, with the rightadvice, specification andequipment selection that willexceed expectations and lastthe test of time.

Authorised packagers for GEOil & Gas, rotary vane &reciprocating compressors.Applications include fuelgas boost, re-injection, gaslift, petrochemical / process,FPSO & offshore, vapourrecovery and high pressuresystems.

Flotech – also renowned forKallt® Heat Exchange andGreenlane® Biogas upgradingsystems.

BDA

2385

6C

GT

flotech.comSweden - Australia - New Zealand - Singapore

is about encouraging investment in Australia and optimising commercial outcomes.

“Governments don’t make investment decisions; we create the regulatory environment which says to industry there’s some certainty: you know the rules, there are opportunities in Australia, you have got to grasp the market opportunities.”

Mr Ferguson has welcomed the Productivity Commission's review of petroleum industry regulation, in which the Commission will review the regulation of natural gas projects that involve more than one jurisdiction and will consider options for a national regulatory authority to manage all regulatory approvals for the upstream petroleum industry.

Also under development are the proposals for the Australian Energy Market Operator and the National Gas Law, which has recently been introduced to the South Australian Parliament. Mr Ferguson reiterated to Gas Today that the National Gas Law represents the outcome of consultation with gas operators and state and territory governments.

He says that while the National Gas Law does involve a Bulletin Board, this is about creating a framework so that people have a better understanding of the national market and common operational rules across jurisdictions.

In the immediate future, Mr Ferguson says the Government will continue to nurture open and transparent dialogue with the gas sector.

“There will be no hidden agendas, it’s all going to be put in place and you [stakeholders and businesses] can work with some certainty,” he explains. “It’s about the increased use of gas for electricity generation in Australia, and that’s what the community wants.”

Climate change and an Australian ETS

Of course climate change policy is a major part of Australia’s energy industry future and Mr Ferguson believes that a balanced and nationally consistent set of climate change measures is the way forward not only for the environment but for the economy.

“We’ve got to make sure that we have got a nationally consistent set of climate change measures, because that guarantees cooperation. But this also says to the energy sector that we are attractive for investments and that there is one common system where we’ve got the balance right,” Mr Ferguson says.

The future for Australia’s natural gas industry

The other major challenge for Australia’s energy industry is technological development, not just for the benefit of Australia but for the world.

“We are very much a fossil fuel-dependent nation, there’s clearly going to be a growth in the renewable sector and the use of gas, but we have to get clean coal technology right.”

He explains that projects such as the Otway geosequestration project must be pursued as they are of great significance

to Australia and the rest of the world. As developed and developing countries alike face the problem of rising CO2 emissions, Mr Ferguson explains that there is a lot of international interest in what Australia is doing.

Australia’s gas industry has a prominent place in Australia’s energy future and Mr Ferguson is keen to keep it that way.

“[The gas industry] has massive potential for Australia domestically and internationally, for local domestic energy purposes and for the purposes of export opportunities. I think the gas sector is a key part of our future.”


Barry is the face of a new campaign, Natural Gas. The Natural Choice, launched by Alinta AGN. The

campaign is the first on-air advertising and marketing campaign focusing on the promotion and benefits of natural gas since the 1990s that is not about promoting natural gas producers or retailers but the resource itself.

Lauren Ashford, Managing Director of the campaign’s designers, Pulse Marketing Group, said that there has been an absence of advertising about specific energy products due to past deregulation in the industry which saw the promotion of energy retailers and brands.

Research conducted by Roy Morgan Research on energy consumer choices showed that most people surveyed were concerned about the environment but unaware of the environmental benefits of natural gas. It also showed that over 70 per cent of people believed natural gas a better choice for hot water and home heating.

Alinta AGN Acting CEO David Clerk said that natural gas is the obvious choice for people who are looking for a cost effective and more environmentally friendly energy source for their homes.

“With current government and media attention on carbon emissions, Australians are becoming very aware of the potential negative impacts of climate change. The move to substitute natural gas in place of electricity is the simplest and most efficient way to reduce greenhouse emissions from Australian homes,” Mr Clerk said.

“This campaign is a way to show people that we, as energy suppliers, are equally concerned about the environment we live in and can provide Australians with a way

to play their part in reducing greenhouse gas emissions.

“The average household can reduce its greenhouse emissions by 3 tonnes per annum by simply replacing its old off-peak storage hot water system with a 5 star gas hot water system.”

The television and print campaign emphasises the benefits of using natural gas for cooking, home and water heating. It focuses on an average family, with a father who gets himself into some unfortunate situations around the house. While Barry doesn’t always make the best choices, one of his better ones is to

connect his house to natural gas – saving him money, helping the environment and reducing his carbon footprint.

Alinta AGN Manager for Gas Network Development Peter Harcus told Gas Today that since its launch in early March, the campaign has been quite successful and that feedback from retailers is that they are happy with the campaign’s progress.

“Certainly from a consumer perspective the feedback was very good,” he said. “We are getting 1,500 hits a week on the website, of which about 1,300 are new. So we’re pretty pleased with that.”

Ultimately, however, the campaign is about increasing the number of gas appliances being installed and Alinta AGN is working with the Gas Industry Alliance to monitor and report this and more effectively monitor the campaign’s success. The alliance is made up of the Energy Networks Association, the Australian Liquefied Petroleum Gas Association, the Gas Appliance Manufacturer’s Association of Australia and the National Association of Food Equipment Suppliers.

“At the end of the day that is what this campaign is all about – helping increase the number of gas appliances being sold. So that’s one of the key industry initiatives that I’m driving,” Mr Harcus said. “Hopefully we should be in a position by the middle of this year to pull together appliance sales statistics being reported regularly so the industry can assess performance.”

Alinta has said that natural gas is Australia’s fastest growing energy source and that replacing electricity with the direct use of natural gas in New South Wales homes can reduce the state’s greenhouse emissions by up to 75 per cent. Natural gas currently accounts for 18 per cent of the country’s primary energy market and ABARE has forecast that this will increase to 24 per cent by 2020.

The winter Barry’s Got Gas campaign will be launched in June and will promote natural gas heating.

Barry’s Got Gas. This is not an embarrassing problem Barry has, but a campaign to promote the benefits of natural gas use to New South Wales’ consumers and reduce carbon emissions.

Barry – the hapless face of a serious gas campaign

For more information about the Natural Gas. The Natural Choice campaign visit http://www thenaturalchoice.com.au/

Barry from the Barry's Got Gas television campaign promoting natural gas use in New South Wales.

Codmah Pty Ltd

Since commencing business, Codmah has built up a team of professional staff with solid industry experience to successfully deliver quality project outcomes that meets or exceeds our clients expectations.

Codmah’s ability to draw upon its civil engineering expertise enables it to provide the most cost effective solution without compromising the quality of the final product and allows the flexibility to offer potential improvement on a project during any stage of construction.

Codmah also has at its disposal a modern fleet of light, medium and heavy plant and machinery that can meet any specific project requirements. Furthermore, all plant and machinery is systematically serviced in accordance with Codmah’s internally developed electronic servicing program, which ensures continued reliability and top performance.

Codmah’s recently completed and ongoing projects include –15km section of 500mm diameter steel gas pipeline for the Sydney Primary LoopUpgrade of 550mm diameter steel gas pipeline in Western Sydney for AlintaGravity sewer, PE pump sewer and reticulation for Sydney Water in the Blue MountainsRelocation of 150mm diameter steel gas main in Chatswood CBD for Laing O’RourkePE gas pipe reticulation in Bungendore (NSW) and Launceston (TAS)Please visit our website for more information on our company and other projects, or contact us at one of our offices listed below

SPRINGWOOD OFFICE24 Burns RoadSpringwood, NSW, 2777T: 02 4751 8055 F: 02 4751 8438E: [email protected] to:Unit 1, Lot 306 Progress CircuitPrestons NSW 2170

HEAD OFFICE Unit 1, Lot 306 Progress CircuitPrestons NSW 2170T: 02 9933 5600F: 02 9933 5666E: [email protected] to:Unit 1, Lot 306 Progress CircuitPrestons NSW 2170

TASMANIA OFFICE12A Derby StreetInvermay, TAS, 7248T: 03 6326 4333F: 03 6326 4222E: [email protected] to:Unit 1, Lot 306 Progress CircuitPrestons NSW 2170

ABN 19 051 474 983Codmah Pty Ltd

ABN 19 051 474 983Codmah Pty Ltd

ISO9001:2000Lic No. QEC14401

www.codmah.com.auCodmah Pty Ltd

www.codmah.com.auCodmah Pty Ltd

CIVIL PIPELINE AND HORIZONTAL DIRECTIONAL DRILLING CONTRACTORS


“It’s been a juggernaut, really. It’s revealed an absolutely phenomenal resource in Queensland, and to

some extent in NSW,” said Australian Petroleum Production & Exploration Association Chief Executive Belinda Robinson.

Queensland is likely to remain at the forefront of CSG exploration and production, with the Queensland state government having recently released more than 100,000 sq km of both petroleum and CSG acreages around the Galilee and Eromanga Basins in Central Queensland. Queensland Mines and Energy Minister Geoff Wilson said that the move would likely attract more than $500 million investment for exploration of the basins.

“There’s a lot of untapped potential for new discoveries in those areas. Today’s exploration will yield tomorrow’s jobs.”

Established CSG companies like Mosaic, Queensland Gas Company (QGC) and Origin Energy have been tapping the

whole supply-chain of tomorrow’s CSG, recently announcing major expansions to drilling campaigns as well as projects which have already been commissioned.

Mosaic Oil has successfully raised $4.4 million as part of a strategy to accelerate its 2008 to 2010 drilling campaign in the Surat-Bowen Basin, which will see the company expand its 10 well 2008 drilling program in the Surat-Bowen Basin to 15 wells.

Mosaic has also recently signed an agreement with CS Energy, which will assist the company to develop approximately 6 PJ of committed 2P gas reserves in the permit and in converting a part of approximately 14 PJ of 3P to 2P reserves for incremental gas sale under a revised gas supply agreement.

QGC’s expansion of the Berwyndale South development in the Surat Basin with the addition of new compressor units remains on track. These new units and an additional dehydration unit will expand plant capacity to up to 160

terajoules per day TJ/d.However, one of the biggest expansions

announced this quarter was Origin Energy’s $760 million plan for the Spring Gully gas field in Queensland’s Surat Basin.

The expansion to 150 PJ/d capacity will occur to meet the Darling Downs Power Station load. The field was originally to have a capacity of 85 PJ/d, however an extra 60 wells, increased gas processing capacity and water treatment plant will now be developed in order to handle Darling Down’s 44 PJ/a load and a Rio Tinto contract for 22 PJ/a. The Spring Gully field will be supplemented by the development of the Talinga field in the Walloon coal seams.

Corporate deals promote NSW CSG

Changes to the structure of companies have also spurred development of a number of CSG projects based in NSW.

One of the biggest companies in the industry, AJ Lucas intends to ‘spin off’ its CSG focussed subsidiary Lucas Energy within the next 12 months.

The subsidiary was established to identify develop and commercialise CSG and other unconventional gas assets with initial investments including NSW’s Gloucester Basin.

Recently, Lucas Energy and Molopo Australia received an initial reserves certification for 1P CSG recovery of 14.9 billion cubic feet (Bcf) at the company’s Gloucester Basin Project. Located approximately 100 km north of Newcastle and covering an area of 1,050 sq km, the project is estimated to have 170.2 Bcf of 2P reserves and 359.2 Bcf of 3P reserves.

Lucas Energy said that the certification identifies a potential 525 Bcf of recoverable gas from a mapped volume of approximately 1,600 Bcf of gas in place.

The current exploration data covers only part of the Gloucester Basin, and Lucas said that as the exploration program is expanded, additional areas will be included in future reserves certification exercises.

“This certification represents a significant milestone for the project

In the last year, coal seam gas (CSG) production in Queensland and NSW grew by 40.2 per cent to reach a record 113 petajoules (PJ). While this accounts for only 9 per cent of Australian gas consumption, the nascent CSG industry has a bright future amid the start up of drilling programs, expansion of existing CSG projects and the tantalising prospect of exporting the gas as LNG.

CSG – firing up Australia’s gas industry

Gloucester Basin Project. Located approximately 100 km north of Newcastle and covering an area of 1,050 sq km, the project is estimated to have 170.2

of approximately 1,600 Bcf of gas in

said that as the exploration program

exercises.

significant milestone for the project Schematic of the Santos Gladstone LNG plant.


and confirms its economic potential. CSG projects traditionally commence with relatively low levels of 2P certified reserves and increase significantly over time as greater production confidence and additional data coverage are obtained,” said a Lucas statement.

Lucas Energy’s corporate dealings have also promoted development of CSG potential at Sydney Gas’ Hunter gas project. Chief among them, the deal between AJ Lucas and Sydney Gas, is expected to enable the two companies to prove up more gas reserves and commercialise the CSG potential at the Hunter gas project.

“Our directional drilling technology has already been instrumental in identifying CSG at Camden and we look forward to applying our drilling technology and expertise in other areas within the Sydney Basin, most likely Hunter,” AJ Lucas Executive Chairman Alan Campbell said.

Sydney Gas is developing gas production in the Hunter and Newcastle regions, in a three phase, 300-well drilling program over five years, which is expected to produce up to 40 PJ/a of gas to the Singleton-Muswellbrook and Newcastle regions for up to 10 years.

The increase in estimated reserves in the Clarence Moreton Basin comprises the final major development that has demonstrated the considerable potential of NSW CSG reserves.

Estimates of project operator Metgasco’s 2P reserves have been revised to 247 PJ, a 27 per cent increase from the 195 PJ assessed in September last year. The recent assessment has increased Metgasco’s 3P reserves by 20 per cent to 1,389 PJ from 1,156 PJ in September last year.

Metgasco is continuing its technical testing and evaluation program and expects further reserve upgrades in the near future.

Exporting CSG: The Gladstone LNG projects

One of the most significant developments in the Australian CSG market has been the progress achieved on four CSG-powered LNG export projects in Gladstone. These developments have not only spurred a flurry of activity relating to the LNG plants, but a considerable amount of investment CSG drilling and development, in both core Queensland basins and further afield.

Santos’sGladstoneLNG™projectSome analysts have suggested that

Santos’ proposal is at the forefront, with

the recent award of two parallel pre-front end engineering and design (pre-FEED) contracts to Foster Wheeler and Bechtel to each undertake a six month study of the LNG project.

The award of these contracts enables Santos to maintain its project schedule, with a decision to move to a formal FEED process anticipated by the end of this year or early next year, a Final Investment Decision by the end of 2009, and first LNG cargos early in 2014.

Santos acting chief executive officer David Knox said “This is clearly a significant milestone, and further demonstrates the momentum which is building around Gladstone LNG. Today’s dual pre-FEED contract awards have been achieved in line with the project schedule as previously communicated to the market.

“Since announcing the project mid last year, Santos has made significant progress in terms of growing our upstream gas resources, securing a freehold liquefaction plant site in Gladstone, lodging key environmental approval documents, and commencing a

process to secure a potential partner for the Gladstone LNG project,” he said.

SunshineGasandSojitzCorporation’sLNGplant

In a separate development, Sunshine Gas recently awarded the FEED contract for its Lacerta CSG field, which will fuel its proposed LNG plant in Gladstone.

The contract, awarded to a consortium of GHD and Delco Australia, is part of the company’s plan to commercialise the CSG field, located north of Roma in Queensland. The Lacerta Project currently has 3P reserves of 1,097 PJ, including 469 PJ of 2P reserves and 44 PJ of 1P. The company’s objective is to significantly increase Lacerta’s 1P and 2P reserve volumes as it moves into the development phase of the project.

Sunshine Gas has said that Lacerta’s existing 2P reserves would support the first LNG train and further reserve upgrades would provide a platform for expansion of the proposed 500,000 t/a plant.

Sunshine Gas Managing Director Tony Gilby said that preparation of the

QLD CSG – PROvING UP AUSTRALIAN LNG

The global demand for LNG is forecast to more than double from 150 MMt/a in 2006 to 400 MMt/a by 2015.

Queensland’s leading CSG explorers are confident about the future of the industry and the state’s massive potential reserves that will prove it

a first class LNG exporter whilst domestic supply is ensured.

Sunshine Gas’ Tony Gilby believes Queensland’s CSG industry will go from strength to strength as its importance as a relatively clean fuel continues to be recognised. He told Gas Today that there are, and will continue to be, ample CSG reserves in Queensland to supply both the

domestic and export markets well into the future.

“There is more than enough gas for both the domestic and export markets in Queensland,” he said. “However, given the fact that current Queensland gas prices are amongst the cheapest in the world coupled with increasing access by the producers to world market parity prices,

domestic gas prices will steadily rise over the coming years.”

Richard Cottee said that QGC’s deal with the BG Group will put Queensland’s gas on the world stage and transform the company from

an explorer and producer to a fully integrated energy company.

“We believe there could be enormous amounts of reserves in the coal seam gas sector, provided appropriate pricing is realised. The outlet

for LNG will enable that potential to be realised earlier and at an appropriate time, while the world tries to find a carbon free energy

source.”

Despite this alluring export-oriented opportunity, Mr Cottee said QGC remains committed to continued energy security in Queensland and that a minimum of 20 per cent of the company’s gas will continue to

feed the domestic market.


Environmental Impact Statement for the Gladstone LNG project had started and FEED was expected to begin during the first half of 2008.

Sunshine and joint venture partner Sojitz Corporation plan to have the project’s bankable feasibility study completed by the end of the calendar year 2008 and production underway during the first quarter of 2012.

LNGLtd’sFisherman'sLandingLNGProject

While LNG Ltd’s Fisherman's Landing project has not progressed to the stage of conducting preliminary engineering, unlike the other developments, it has diversified potential CSG sources beyond Queensland.

Recently, LNG Ltd and Arrow Energy signed a cooperation agreement for the identification and potential development of LNG projects utilising CSG as the feedstock for LNG production.

The CSG LNG opportunities will focus on Queensland, northern New South Wales and Southeast Asia, where Arrow already holds significant CSG-bearing and producing tenements and is in the process of pursuing further potential CSG exploration and production prospects.

LNG Ltd will have primary responsibility for all LNG project development activities and Arrow will have primary responsibility for all associated CSG project development activities.

LNG Ltd’s 1 million tonnes per annum

(MMt/a) LNG plant at Gladstone is estimated to cost $410.5 million for the first phase of development. The LNG plant site and design will provide for additional LNG trains of similar size, subject to the availability of further gas, with the overall LNG plant storage facilities and infrastructure to be capable of handling production of at least 3 MMt/a.

QGCCSGLNGFacilityQGC’s recent agreement with the

British Gas (BG) Group highlights another key component of the gas export chain – an international partner with access to infrastructure in an end-market with substantial demand, like India.

The two companies have agreed to cooperate in the exploration and development of onshore CSG as well as in the development of domestic market opportunities and a new LNG production and export facility on the Queensland coast. The proposed LNG facility will produce 3 to 4 MMt/a of LNG, all of which will be purchased by BG under a 20-year agreement. The LNG project is set to ship LNG starting in 2013 from a terminal to be built in Gladstone.

QGC Managing Director Richard Cottee said that the deal will put Queensland’s

Sunshine Gas Lacerta flare.

Adelaide: Mark Dayman Tel: 08 8364 1000 Email: [email protected] Brisbane: Bruce Dickson Tel: 07 3208 9600 Email: [email protected]

Celebrating 25yrs of service.Surveying | Route Selection | Pipeline Design |Feed Studies GIS System | Project Management | www.fyfe.com.au

FYF1

0914

/ein

stei

n

FYF10914 Pipeliner HP (125x185mm1 1 29/2/08 11:53:14 AM


gas on the world stage and transform the company from an explorer and producer to a fully integrated energy company.

As part of this development, QGC plans to accelerate its exploration program to meet 2P goals for the LNG project by drilling more than 200 exploration wells over the next three years.

BG Group is not the only international investor with access to the Asian market in Australian CSG tenements. In a recent development, Indian company Petronet LNG revealed that it plans to invest $1.5 billion to $3 billion to join one or more Australian CSG projects with the view to export the gas as LNG.

“We expect to firm up our decision to invest in an upstream project in the next six to eight months,” said Petronet LNG Managing Director Prosad Dasgupta. “One of the conditions for the investment is that Petronet be a preferred buyer of gas. We are looking for projects between 7 and 15 Tcf.”

Toward frontier projectsIndustry analysts have hoped that

the international interest in Australian CSG developments, will extend beyond the established and well-developed regions including the Surat/Bowen basin but also frontier fields, in relatively underdeveloped Western Australia and Tasmania.

Western Australia’s Deputy Premier Eric Ripper hopes international investment in petroleum exploration will boost gas production in the state, highlighting the role of CSG.

“Western Australia has become a very attractive investment destination for international companies,” Mr Ripper said. “And there is already a record $4 billion committed to exploring oil and gas opportunities in Western Australia over the next six years.”

“Potential exists for production of CSG from coal resources in the southwest of the state. The Department of Industry and Resources has been involved in research aimed at enhancing the petroleum prospectivity of the state – this research includes assessing the potential areas for CSG exploration and production,” he said.

Whereas Western Australia’s attractiveness lies in its considerable experience in conventional oil and gas development, Tasmania is attractive as a CSG target because the converse is true. With little indigenous energy sources of its own, the island-state has primarily relied on gas from Victorian gas fields. CSG exploration offers the state the

opportunity to become a gas producer and reduce its dependence.

Pure Energy, one of the largest CSG acreage holders in Queensland, has led the search for Tasmanian CSG prospects, having recently completed work on wells in northeast Tasmania. The Tasmanian Basin tenement covers 11,295 sq km and is a mature coal-mining production province with significant coal resources, which the company believes have significant potential for CSG.

A total net coal thickness of approximately 15m was encountered in each well. Nine drill stem tests were conducted with the coals demonstrating moderate to very good permeability for CSG production. Gas desorption testing is complete and Langmuir isotherms have been performed. The company is now evaluating follow-up well locations.

ChallengesIndustry analysts have long-

emphasised the substantial role they predict gas to have in providing clean energy to offset greenhouse gas emissions. CSG provides a further advantage in drought-afflicted Australia since water is produced as a by-product of extraction.

The immense environmental potential of CSG has been recognised with Origin Energy having won APPEA’s environmental honour award for the commissioning of Australia’s first CSG water treatment facility. Instead of constructing hectares of evaporation ponds to manage the water by-product, Origin commissioned the largest CSG water treatment facility in the world, which produces 9 mega litres per day.

These strengths of CSG that have spurred its growth - from the geographic diversity and proximity of CSG prospects to major cities - and its low environmental impact highlight the major challenge for the industry: that being it is not growing fast enough to service projected demand and to accrue the substantial gains of which it is capable.

Ms Robinson notes that “Projects on the drawing board don’t earn income for Australia and don’t offset carbon emissions.”

Ultimately, the question remains whether Australia is able to drill over 5,000 CSG wells by 2030. With the wealth of new projects and new entities involved in the industry, it seems likely that the burgeoning industry will build on its current momentum to substantially transform the Australian energy landscape in the near future.


Paul Bilston, the man in charge of Lucas Energy – a company set to spin off from its parent, AJ Lucas

Group, within the next twelve months – seems quietly confident about the company’s future and is quite happy with progress to date at its CSG Gloucester Basin development which it owns 70 per cent with joint venture partner Molopo Australia owning the balance.

With an estimated 2.5 to 3.0 trillion cubic feet (Tcf) of gas in-place, Gloucester has an initial 2P reserves certification of 170 billion cubic feet (Bcf) and 3P reserves of 359.2 Bcf. And while he won’t answer the multimillion dollar question of just how much gas Gloucester has, Mr Bilston does think the current reserve estimations are conservative and that the company will ultimately recover a significant portion of the gas in-place.

As one of the largest initial reserves certifications of any Australian CSG project, Mr Bilston says that Gloucester is clearly commercially viable. However, the ultimate scale of the project will only become clearer after a significant amount of additional exploration work.

The Gloucester team has been busy completing its technical understanding of the basin. Wet weather hampered some field operations in the last year but the company is now 80 per cent through its current appraisal work and once complete, Mr Bilston says the company will have an improved confidence of Gloucester’s overall resources.

A prospective east coast market With the amount of the gas reserves

awaiting the outcome of further drilling results, Mr Bilston says the focus is now on what to do with the gas. He notes that for CSG exploration and production companies, NSW is full of opportunity.

“In NSW we’ve got a market that is largely uncontracted for gas from about 2012 onwards” he explains. “It is a market that is growing and has the potential to grow substantially from power generation across the course of the next few years. So we’re looking to try and identify the commercial path that provides us with the

best opportunities and the best returns. That is our focus for this year.

“We’re in the process of permitting a pipeline down to Hexham, we’re looking at power generation, we’re looking at sales direct to customers, we’re looking at all sorts of things. This is potentially significant capital project and it’s important to consider all of the alternatives to maximise the returns” Mr Bilston adds with cautious excitement.

And will the future see Lucas scaling up to LNG? The short answer is no, at least not at the moment. LNG requires a significantly greater level of reserves than currently exists in the region.

“We get quite a lot of our benefits from a price perspective from Queensland’s proposed CSG LNG projects by virtue of our location and by virtue of the fact that they are keeping gas in Queensland at the moment. If all of the gas in Queensland was all of a sudden turned down to come into NSW, we would suffer but at the moment, the likely implementation of future LNG exports from Queensland is holding gas prices.”

The issue of domestic gas supply versus export markets has been the source of much consternation, particularly on Australia’s west coast. However when you are an exploration and production company like Lucas, this particular dilemma becomes a good business opportunity.

Mr Bilston believes NSW has got some considerable issues in terms of its future gas supply.

“New gas supply from Victoria is capacity constrained at the moment” he explains, adding that potential flows from the state is limited by its pipeline capacity and declining gas resources from the Cooper Basin.

So without a particularly vibrant indigenous gas resource itself, where is the New South Wales’ gas going to come from?

As Mr Bilston explains, the nice thing about CSG is that coal basins have typically been reasonably well defined. In addition to the Gloucester Basin, he says the prospects with most potential in the

state are, the Sydney Basin (Sydney Gas), the Gunnedah Basin (Eastern Star Gas and Santos) and the Clarence Moreton Basin (Metgasco). Despite these many prospects, Mr Bilston says that NSW has not proved itself a massive resource base like Queensland.

“At this stage, the NSW industry has not demonstrated that any of those projects as they stand are comparable to Fairview or Berwyndale South, both located in Queensland” he says. “That’s not to say that they won’t be. A number of the projects have a very large resource base, and if the operators can make them work, then they could potentially become quite big projects.

“To date, what I haven’t seen evidence of is anything in the NSW CSG prospects that has quite the scale and the productive capacity that we’re seeing out in Queensland. However, New South Wales is much earlier in its CSG development evolution. But we’re making rapid strides to catch up. At Gloucester, we’ve got a well doing upwards of a million [cubic feet] a day which is just a fantastic rate – it is highly economic – but do we have the potential to create 7 Tcf of reserves? Not at Gloucester, we just don’t have the area. However, I’m sure that NSW as a whole will prove up significant extra reserves in time. Who knows, one day, the NSW reserves may match those in Queensland.”

Not discounting the tension between gas demand and supply on the east coast, the good news for gas exploration and production companies in NSW is for a prospective market post-2012 of much higher gas prices.

“From a producer’s perspective, we’re all trying to maximise how much money we get paid for the gas. From a supply/security perspective, people don’t want to pay any more than they have to.

“But the reality is that energy prices in the eastern seaboard are going to go up materially” he adds, “and as that happens, the price gap between the potential for LNG and domestic markets is such that the drive to go to export LNG will decrease for some places. I suspect what will happen

Queensland is known as Australia’s most lucrative coal seam gas (CSG) province, however New South Wales is also contributing to the nation’s growing reserves. Gas Today spoke with Lucas Energy’s General Manager Paul Bilston about the company’s Gloucester Basin project, the east coast gas market and new opportunities for an emerging CSG company.

Lucas Energy – tapping NSW CSG


is that some companies will choose to go offshore and enough will stay onshore because prices will come up.”

So what is Lucas planning to do with Gloucester’s gas? The possibilities are many and the company is focusing on identifying the most prospective commercial path. Route selection and refinement is underway on a pipeline to Hexham, which would feed gas into Newcastle’s grid, with first gas targeted for 2010. Then there is power generation which Mr Bilston says includes the potential for everything from small to large-scale generation within the region. He says that Lucas has had informal discussions with the key players in the power generation industry but nothing has been finalised yet.

“We’re not in a rush, because right now it is difficult to frame where the energy equation in NSW is going to be in twelve months” he says, adding that one of the major variables is the impact of the New South Wales privatisation process which may create an environment where attaining firm commitments from private sector businesses is difficult.

Of course, the other unknown factor is the uncertainty around climate change and a price on carbon. Like many company executives in the emerging CSG space, Mr Bilston has a number of questions: What is happening with emissions trading? Will existing coal-fired power stations be allocated free permits and what are the implications of this? The result of the situation for Lucas, says Mr Bilston, is that until there is clarification on the answers to these questions, and the NSW energy privatisation process becomes clearer, it is better to delay any significant commercial decisions.

Working with the communityWith these potential large-scale changes

in mind, Mr Bilston considers the effective management of regulatory and approvals processes as the company’s biggest challenge. Key to this is the relationship Lucas has with Gloucester’s local communities. Managing the company’s relationship with the community involves a multilayered strategy but Mr Bilston says the most important thing is being honest and transparent.

“At the moment, we’ve got a reasonably supportive community but engaging in it in a positive way and creating a win-win situation is really important to us. Securing our pipeline route will obviously also be a challenge in its own right,” he adds.

“Engaging, communicating with the community, being sensible with our commercial arrangements and maximising local content are the things we’re doing in that space at the moment” he explains. “In terms of approvals – the bit that we can control – it’s important to put the best quality information in front of the regulatory system and that’s what we’re focused on at the moment.”

Ultimately the challenge comes back to the community. The more detailed information out there in the public domain, the easier it is to gain approvals from the government. As Mr Bilston says, “If we don’t win the trust of that community, then we potentially don’t have a project.”

Expanding horizonsWhile Gloucester is the company’s

main focus, Lucas has other projects and prospects in the pipeline. In January, AJ Lucas Group acquired a 15 per cent shareholding in Sydney Gas whose

acreage extends throughout the Sydney Basin.

Overseas, Lucas Energy owns 60 per cent of Canadian company Arawn Energy. Mr Bilston says the “complex” and mature North American gas market has some interesting opportunities. The higher gas prices mean that projects do not require the same flow rates needed in Australia to make a project viable and there are some really good skills and expertise working in that sector which Lucas can tap into. However Mr Bilston believes there is also the opportunity to take some of Australia’s expertise north.

“Australia of necessity has been really good at developing innovation. As an example, we just haven’t had the population density to support pipeline infrastructure” he says. “We therefore had to develop new pipeline installation methods to reduce the cost to a level the market could bear. I think we probably still have the best pipeline code in the world and we are amongst the lowest cost builders of pipelines in the world. The same applies to drilling and I know from what we’re drilling in Canada that some of our drilling costs are very competitive.”

Mr Bilston also flags the potential of developing unconventional hydrocarbons in Southeast Asia, particularly in Indonesia and India.

“We could be quite well-positioned, given the leverage we could potentially bring from our drilling business, to participate in some overseas development,” he explains. “So we’re trying to work that through. Our focus has been in Gloucester, still is Gloucester but we’re trying to work past that and apply our CSG and drilling expertise elsewhere.”


As greenhouse gas emissions rise and non-renewable energy sources diminish, landfill waste gas, coal

seam methane and biogas are becoming increasingly popular as major sources of clean energy.

The most common component of the gas composition is methane, which if emitted into the atmosphere has a global warming potential, 21 times that of carbon dioxide. However, if the methane is used for power generation it does not escape into the atmosphere and the global warming effect is reduced. Monitoring the amount of methane being utilised for power generation is crucial to quantify the carbon credits and also to ensure the concentration of methane does not reach a dangerously low level.

Australian company Austech Instruments has recently developed an analyser to monitor the concentration of methane being fed to engine modules installed in power stations supplied by landfill waste gas, coal seam methane or biogas. The analyser is used together

with other instruments to monitor the flow of methane and enables accurate on-line real time monitoring of the methane concentration within the overall gas mix. This monitoring ensures that the engine can be run to optimum efficiency, can be shutdown if the methane approaches a

dangerously low level of concentration, and importantly provides a measure of the performance of the power station in removing methane from the atmosphere, assisting in the calculation of greenhouse carbon credits.

The Austech Methane Analyser is an Australian Certified Flameproof Enclosure (Exd), ensuring it can be positioned in a hazardous area close to a fuel rail to shorten the sample line. This minimises the response time of the measurement. The Analyser is accurate, stable and is not cross-sensitive to other hydrocarbons, which is essential with an application where output is integral to the measurement of greenhouse gas abatement. The Analyser can also be used for safety shutdown functions.

The Analyser has a local display, 4-20 milliampere output and is available with optional relay outputs. When integrated with Austech’s sample conditioning system, the Methane Analyser can be tailored to each site’s specific conditions and environment.

Utilising methane for power generation can significantly reduce greenhouse gas emissions, however monitoring methane levels in power station engines is crucial. A new methane analyser enables real time monitoring, ensuring accurate methane levels and optimum engine efficiency.

Monitoring solutions for the gas industry

Methane analyser system onsite.

Austech Instruments Pty LtdSydney Office Phone 02 9979 6979Melbourne Office Phone 03 9548 3030Perth Office Phone 08 9227 [email protected] www.aus-tech.com.au

Austech Methane Analyser

4719

• Designed for Landfill Gas, Coal Seam Methane & Biogas Power Generation

• Measures Methane 0 -100% Vol • Independently Proven Accuracy & Stability

• Australian Certified for Hazardous Areas • Turnkey Sampling System also available

Innovative Solutions for Gas Monitoring & DetectionOther significant Austech projects that have been completed in the last two years include:

• LNG Plants • CNG Transport • CSM and LFG Power Stations

Austech Instruments now have Sales and Service Centres in Perth and Melbourne


One pipeline company benefitting from the resources boom is PPI Corporation. A private Australian

owned company, it has been producing Polyethylene (PE) pipe in Brisbane for nearly 30 years.

However the boom has seen its large bore PE pipe capability increase from 160 to 800 millimetres over the last few years. To meet the growing demand, the

company has had to install several new PE extrusion machines in their Brisbane plant as well as Adelaide where current capacity is now 400 millimetre pipe.

Previously, the company’s main PE pipe focus was with fluid transfer over a wide range of markets including mining. However approximately two years ago the company commenced supplying PE pipe for CSG recovery. Since then it has

supplied PE pipes to numerous CSG recovery projects throughout Queensland and New South Wales.

Twelve months ago the company successfully tendered to the Queensland Gas Company for the supply of PE pipes for CSG recovery and for associated water removal at their Windibri project at Chinchilla. The company has also supplied PE pipes for CSG gas recovery project companies in New South Wales, including AGL in the Camden area.

A spokesperson for PPI said the company’s success over the years has largely been due to their ability to form strategic alliances with customers in all market segments.

Outside of Brisbane the company operates factories in Adelaide and Perth and has sales and warehouse facilities in all states.

The rapidly developing coal seam gas industry in Australia has seen a growth in opportunities for pipeline companies.

Pipeline business moves into CSG

Reliable Quality & Prompt Supply throughout Australia.

Contact us for all your special project requirements.

PPI Polyethylene Pipe to 800mm

PPI Corporation Pty Ltd – Mining Industrial & CivilPhil Stolz: (07) 3860 0368 Email: [email protected] Hunt: (07) 3860 0341 Fax: (07) 3860 0392

Manufacturing and warehousing across Australia:Brisbane, Sydney, Melbourne, Hobart, Adelaide, Perth, Darwin and Townsville.

PPI PE100 315mm gas pipe. Queensland Gas Company Limited, Windibri via Chinchilla.

PPI Gas today CSG2 May 08 185x125.indd 1 10/4/08 11:03:37 AM

In December 1986 canaries were finally made redundant in British coal mines. Twenty-two years later the gases

the canaries were used to detect offer Australia’s economy new wings.

The canary was used from the early 1900s to detect CSG that created a safety risk in underground pits. However today, in the vast coal beds of Queensland and northern New South Wales in particular, our yellow avian friend has been replaced by high-tech seismic imaging and drill rigs.

The search for yet more CSG to provide a relatively low cost, low greenhouse emissions fuel for Australia and the neighbouring Asia-Pacific region is a vigorous one. The world’s demand for energy is projected to grow by 40 per cent to 2030 according to ExxonMobil’s most recent global outlook. And Queensland’s energy demand is projected to grow by more than three per cent per year.

Queensland’s petroleum riches and the companies exploring for them are well placed to help feed this demand thanks to government policies that have encouraged the CSG industry, with four CSG-based liquefied natural gas (LNG) projects proposed for the state.

In the Asia-Pacific alone, LNG demand is expected to grow from its current level of about 100 million tonnes (MMt) to a figure approaching 200 MMt/a by 2015, compared to Australia’s total production last year of 15.1 MMt.

Where once canaries feared to tread, today Australian innovation in tapping CSG is leading an energy revolution that will power our region on the path to a carbon-constrained future.

The recent APPEA 2008 conference in Perth heard that CSG production increased by 44 per cent in 2007 to 112 billion cubic

feet (equal to about 20 million barrels of oil).

There is rapidly growing production from the Surat and Bowen basins and in particular west of Taroom at Santos’ Fairview and Origin Energy’s Spring Gully fields, south of Miles at QGC’s Berwyndale South and at Arrow Energy’s Moranbah.

CSG reserves have now reached over 7.3 trillion cubic feet (Tcf) (equivalent to about 140 MMt of LNG), an increase of 2.3 Tcf in two years.

Commentators are speculating that up to two to four times more reserves will be booked as a result of increased exploration. And the potential resource is estimated to be as high as 250 Tcf by the CSIRO. To put that in perspective, 3 Tcf of gas has the same energy content as Australia’s total annual thermal coal exports.

CSG has come of age to the extent that it now supplies about 18 per cent of the eastern Australian gas market and is eyeing off the higher value export markets.

There are now four east coast LNG plants proposed to come on-stream in the period 2011 - 13. This exciting development is as much a testament to the industry’s confidence in the Queensland Government as it is to the magnitude of the resource base.

The potential of CSG to serve Australia’s domestic gas needs and a seemingly insatiable export market is apparent, but there are many hurdles to this important resource being extracted and used for the benefit of all Australians.

One issue the industry continues to grapple with is how to cost-effectively and responsibly deal with the huge amounts of water generated by the process of extracting gas from around coal beds.

Unlike conventional oil or gas wells,

in the case of CSG, the water comes out before the gas does and APPEA believes there is still some work to do to ensure we have the policy measures right in this area.

The rates of water production are certainly larger than needed to fill a canary’s birdbath but they vary from site to site. This provides an opportunity for governments to create appropriate policies to aggregate this water for treatment and supply to local, predominantly drought-ridden, communities.

Origin Energy recently won the APPEA Environment award for its commissioning of Australia’s first fully integrated CSG water treatment facility in Central Queensland.

Instead of constructing hectares of evaporation ponds, Origin has commissioned the largest CSG water treatment facility in the world, producing 9 million litres per day – 10 per cent of the capacity of the proposed $1.3 billion Sydney desalination plant project. Trials on cropping land are under way.

The oil and gas industry recognises that water is a community resource and that governments have an important role to play in its sustainable usage.

Presently, as soon as a reuse resource is released to water bodies, the water immediately reverts to being the property of the Crown, and so to realise an economic return the industry must construct a separate pipeline network to potential customers.

Clearly in many circumstances this makes reuse cost prohibitive and in future could be a factor in project economics that may interfere with the potential of CSG to give new wings to the Australian economy.

Australian Petroleum Production & Exploration Association (APPEA) Chief Executive Belinda Robinson reviews the rise of coal seam gas (CSG), from canaries to mass production. She identifies some of the sector’s major achievements and the key issues it faces as Australia moves towards a carbon constrained future.

CSG may give new wings to the Australian economy

By Belinda Robinson

APPEA Chief Executive Belinda Robinson



The ENA policy on A National Framework for Energy Safety in Australia’ sets out how a common

approach to energy technical and safety regulation in Australia can be incorporated in Australian law and assist in the delivery of safe, reliable and affordable energy.

ENA is recommending the use of Australian Standards to develop the regulatory framework, based around the concept of a Safety and Operating Plan (or Safety Case), which has been adopted to varying degrees by most jurisdictional regulators as the model of best practice regulation.

As early as 1994 the Council of Australian Governments (COAG) approved a recommendation to adopt the performance-based Australian Standard 2885 Pipelines – Gas and Liquid Petroleum to achieve national construction of transmission pipelines. The Standard is cited consistently in jurisdictional legislation.

ENA will be advocating to COAG and the Ministerial Council on Energy (MCE) that it should recognise the development of the performance-based standard being prepared by Standards Australia Committee AG-008 Gas Distribution as the basis of national regulation for gas distribution.

ENA has also commenced preparing an ENA Industry Guideline on Electricity Technical and Safety Regulation for the electricity supply industry as the

proposed scope for a performance-based Australian Standard for electricity network safety management systems.

It is important to note that the 26 March 2008 COAG meeting agreed that national harmonisation of occupational health and safety (OHS) laws was a top priority, with model legislation to be developed and submitted to the Workplace Relations Ministers’ Council by September 2009.

In this context, ENA will be advocating to COAG and the Workplace Relations Ministers’ Council that as a general principle, an energy safety case approved by the relevant regulator should also provide the basis for compliance with the safe workplace obligations under OHS legislation.

As part of the policy, ENA is supporting the creation of a single national energy safety regulatory agency.

ENA believes that the development of a national framework alone will not guarantee national consistency of energy safety regulation, as differences, or perceived differences, in the actual application of any ‘template’ arrangements would remain.

A single national energy safety regulatory agency, perhaps modelled on the National Offshore Petroleum Safety Authority (NOPSA) – which administers offshore petroleum safety legislation, would provide the leadership to ensure a national and consistent approach to energy safety.

However ENA believes that existing jurisdictional regulators will retain their current role while the national energy safety framework is being developed and implemented.

In many areas of Australian public policy, such as in OHS legislation, the regulatory trend is moving towards national alignment. The economic regulation of energy networks has already moved from the jurisdictions to the Commonwealth through the Australian Energy Regulator (AER). The National Electricity Market (NEM) has now been in place since 1998, operated by the National Electricity Market Management Company (NEMMCO).

In April 2007 COAG announced its intention to establish a new national Australian Energy Market Operator (AEMO) by July 2009, for both electricity and gas, to strengthen the national character of energy market governance.

The development of a national energy market, increasing interconnection of energy infrastructure across jurisdictional boundaries and energy companies operating in multiple jurisdictions has produced an increasing need, and justification for, national standardisation of energy industry regulation.

ENA has highlighted over the years that the key to a successful economy is the ability to deliver safe, reliable and affordable energy across the nation. A truly national market ultimately requires one common set of rules.

In April the Energy Networks Association launched a policy supporting a common approach to energy safety in Australia, including the creation of a single national energy safety regulatory agency.

National energy safety rules key to the future

By Energy Networks Association Chief Executive Andrew Blyth

A Policy for a National Framework for Energy Safety in Australia is available from the ENA website atwww.ena.asn.au. ENA is Australia’s peak representative body for gas and

electricity distribution network businesses. Electricity Transmission Network Service Providers (TNSPs) are associate members. Energy network businesses deliver electricity and gas to over

12 million customers across Australia through 840 000 kilometres of electricity lines and 75 000 kilometres of gas distribution pipelines. This energy infrastructure is valued at more than $45 billion,

and each year energy network businesses undertake investment of around $5 billion.


The one day Gas Seminar will be held concurrently with the Australian Gas Industry Trust’s (AGIT) Gas Speak

Colloquium 2008 at Old Parliament House in Canberra as well as the AGIT Gas Industry Dinner. The AGIT events have a long history in encouraging educational activities in the gas industry.

The culmination of events will bring together gas networks specialists, industry operators, business professionals and key government representatives to discuss future challenges for gas networks operators and managers.

The ENA Gas Seminar will focus on the structure of Australia’s gas networks and future challenges, regulation and moving to a uniform national framework, gas market development and examining the key drivers for network operators to

grow the gas market. One of the future challenges identified

for the keynote address is the effect of climate change on gas networks - opportunities and strategies. Climate change, training and skills, and gas market development are expected to be the key topics of discussion at the Gas Seminar’s industry panel session.

The AGIT Gas Industry Dinner, also on Tuesday 23 September, will follow the Gas Seminar program and bring together AGIT Gas Speak participants, Gas Seminar delegates and industry representatives from the gas chain.

ENA encourages the involvement of the gas networks industry in the Gas Seminar, to support development and dialogue on gas networks and gas market issues.

GASSEMINARINBRIEFTuesday 23 September 2008

Old Parliament House, Canberra

For further information contact the Energy Networks Association at [email protected] or on +612 6272 1555

or visit the website at www.ena.asn.au

The ENA Gas Seminar is a non profit event and is being coordinated by members of the ENA Gas Committee, ensuring

that the event is organised by industry for industry. The purpose of the Gas Committee is to develop gas network related policy recommendations and advice for ENA, with the Gas Seminar

providing an essential driver for achieving this objective.The ENA is the peak national body representing gas and electricity distribution businesses throughout Australia.

Electricity transmission businesses are associate members and are full and active participants in the ENA asset management

policy agenda.

The ENA Gas Seminar for 2008 will be held on Tuesday 23 September 2008 for the gas networks industry.

By Liz Adams, Energy Networks Association

If you want to Reduce Operating Costs and If you want to Reduce Operating Costs and Construction Time while Increasing Weld Construction Time while Increasing Weld Quality, Safety and Your Company’s Reliability Quality, Safety and Your Company’s Reliability

and Integrity, contact UT Quality.and Integrity, contact UT Quality.

EMAIL : [email protected] : www.utquality.com

CANADA :A :A + (1) 780 4845558+ (1) 780 4845558UNITED STAUNITED STAUNITED ST TES :ATES :A + (1) 281 955 9300+ (1) 281 955 9300BRAZIL + (55) 21 2257 7550+ (55) 21 2257 7550

+ (55) 21 9233 9964 (mob)+ (55) 21 9233 9964 (mob)SOUTH AMERICA :A :A + (1) 780 695 4048+ (1) 780 695 4048AUSTRALIA / A / A ASIA :A :A + (61) 438 772447SPASPASP IN : + (34) 649 058236

INDIA :A :A + (91) 99 20739680EUROPE:EUROPE: + (31) 62 2208599

UT Quality is active throughout the world, with offices in Canada, USA, South America, Spain, India and now recently in AUSTRALIA & A & A ASIA.

With the latest technology and software programmes, UT Quality provides Advanced Non-Destructive Testing (NDT) and Innovative Inspection Solutions / Programmes to the Oil & Gas Industry (On & Offshore), Petrochemical, Power Generation, Pulp & Paper, Construction / Fabrication, Maritime, Aerospace & Defence Industries.

Services provided include:


When operational, the $780 million 630 megawatt (MW) gas-fired power station will produce

enough power to supply the equivalent of 400,000 Queensland homes. Poised to take advantage of Origin Energy’s CSG reserves in the area around Roma and Chinchilla, the power station will be located near Braemar, 40 kilometres west of Dalby.

Promoting CSG development In November last year, construction

started on the gas-fired power station. Fuel for the power station will initially

be drawn from Origin's Spring Gully

coal seam methane gas reserves 80 km northeast of Roma and later from its Talinga CSG fields in the Walloon Coal Measures. Recently, Origin Energy announced plans to invest a further $360 million to expand its CSG production at Spring Gully.

CSG will be processed at the Spring Gully processing plant and then transported through an existing gas pipeline to Wallumbilla. A new $90 million 200 km pipeline will be constructed from Wallumbilla to the new Darling Downs Power Station site.

In February this year, Origin secured $900 million for the development of

the Darling Downs Power Station and ongoing CSG projects. The development will become one of the lowest cost power stations in the National Electricity Market, in part because Origin directly owns the CSG reserves that will fuel the power station, but also because, the power station is expected to have a low life cycle cost, including both construction and long-term maintenance costs.

Spurring the development of ‘economic powerhouses’

Not only is the Darling Downs Power Station poised to break records in terms of running cost, but Queensland Premier Anna Bligh has said that CSG projects, including the Darling Downs Power Station, have yielded approximately $1 billion worth of development across Queensland, benefiting the regional economy.

“We expect this investment to continue at more than $160 million a year and this

Using Queensland’s rich source of coal seam gas (CSG) reserves, the Darling Downs Power Station is set to become Australia’s largest combined-cycle power station.

Darling Downs - Australia’s biggest combined-cycle power station

Origin contracted a consortium of GE and CH2M Hill to construct the power station. GE will supply three Frame 9E gas turbines with a capacity of 120 MW each and a steam turbine of 270 MW

capacity. CH2M Hill will undertake engineering and construction activities and supply of the balance of plant.


means local jobs and a further boost to our regional economy,” Ms Bligh said. “This Origin power station and associated CSG developments alone will create an average of 440 jobs during the construction phases, and up to 55 jobs when operational.”

“Many of these regional communities have been hit hard by drought in recent years and the rich source of energy in the Surat Basin has the potential to turn towns like Dalby, Miles and Chinchilla into economic powerhouses.”

Providing a myriad of environmental benefits

Powered by CSG, the power station is estimated to emit about half the greenhouse emission of a conventional power station and have broader environmental benefits, according to Queensland Premier Anna Bligh.

“Coal seam gas is a clean energy source and when this station is online, it will produce 2.5 million tonnes per annum less than a conventional power station of its size – which is the equivalent of taking 600,000 cars off the road,” she said.

The environmental benefits of the gas-fired power station also extend to saving water. Since the power station uses air cooled technology, it will use less than 3 per cent of the water a conventional water cooled coal-fired power station would use, or about 200 megalitres (ML) versus 8,000 ML a year.

Additionally, unlike natural gas, which is trapped by specific geological conditions, since CSG is held in place by water, pumping out water is part of the CSG production process. Origin plans

to develop a 9 ML/day reverse osmosis water treatment plant as part of the broader project. However, one of the project’s bigger challenges has revolved around the pre-treatment of this water, which has high coal fine loads.

Pre-treatment involves micro- and ultra-filtration, with a settling pond prior to the reverse osmosis reaction that exposes the water to the atmosphere and allows some heavier minerals to precipitate out. There are a range of different markets for this water, from supplying local councils with potable supplies to nearby industrial markets, including coal washing. Ultimately however, the projects’ broader environmental benefits are particularly important given the considerable impact of the drought on Queensland in recent years.

“Accelerating the development of the Darling Downs Power Station

ensures we are able to select the site and sequence of development that will create the most economically attractive project for Origin. The development of the power project will accelerate the development of our coal seam gas resources, and, together with our peaking power stations at Roma (80 MW) and Mt Stuart (288 MW) and off-take rights from the Wambo peaking Power Station (450 MW), create a diverse and competitive portfolio of generation to support our electricity retail business in Queensland,” said Origin’s Managing Director Grant King.

When completed in 2010, the Darling Downs Power Station is likely to bring a range of other benefits that go beyond just the gas industry, giving the drought-affected regional economy two boosts: by bringing jobs to the region and providing another source of water.

Origin Energy's Andrew Stockton, Grant King and Karen Moses

turn the first sod with Queensland Permier Anna Bligh.


Ceramic fuel cells work by converting natural gas and renewable fuels like hydrogen into heat and power, and

are particularly promising as a cleaner energy source because they increasingly address the need for higher efficiency energy production with relatively low greenhouse gas emissions.

Whereas batteries store a limited amount of electrical energy, fuel cells consume fuel and are consequently able to operate virtually continuously as long as the necessary flows of fuel and air are maintained.

There are many different types of fuel cells, ranging from those that operate at lower temperatures, which require a pure supply of hydrogen as a fuel and specialised equipment to those that operate at higher temperatures and have the added flexibility to operate on natural gas, without needing specialised equipment or new infrastructure. These higher temperature fuel cells, which use gas as a fuel and existing natural gas infrastructure, have been reported to operate more efficiently than the hydrogen-fuelled lower temperature counterparts.

Operating between 450 and 1,000ºC, Solid Oxide Fuel Cells (SOFC) are a prime example of high temperature fuel cells, which have electrical efficiency ranging up to 70 per cent. Using natural gas as a fuel, they can be used for all types of stationary power generation, from below 1 kilowatt (kW) to many megawatts (MW).

Using gas as a feedstockAustralian company Ceramic Fuel Cells

(CFCL) has developed a SOFC system that can be connected into a regular natural gas network, making the fuel cell system more accessible since there is no need to convert hydrocarbon fuel sources into hydrogen gas. However, SOFCs can also be redesigned to use other fuel sources such as hydrogen, LPG, biogas, coal gas, ethanol, methane and other hydrocarbon fuels.

“CFCL has designed the fuel cells to operate on natural gas, primarily because the natural gas infrastructure already exists – rather than waiting for the ‘hydrogen economy’ to eventuate. We see the interaction as complimentary, as CFCL’s fuel cell will be integrated inside a future appliance, such as a boiler, that operates on the natural gas grid,” says CFCL’s Trent Rowe.

Gas-fuelled SOFCs are more efficient when compared to other types of electricity generation such as coal-powered turbines. While the efficiency of coal-powered electricity generation has improved over time, there is still a considerable amount of waste heat generated. This is because of the indirect method used to harness the energy in

With double the efficiency of coal-fired electricity generation, gas-powered ceramic fuel cells have the potential to provide a whole new market for natural gas.

Ceramic Fuel Cells – complementing the gas sector

greenhouse gas emissions.

coal, with system electricity efficiency ranging from 30 to 37 per cent. In contrast, SOFCs directly convert chemical energy into electricity, heat and water with 40 to 70 per cent electrical efficiency from energy input.

In addition, since the production of electricity is a direct process, SOFCs do not produce large quantities of greenhouse gases, nitrous oxides or sulphur oxides, emitting only steam and possibly low levels of carbon dioxide. The production of heat makes SOFCs ideal for domestic combined heat and power applications that not only produce heat for space heating and hot water, but also produce electricity which can be used around the house or fed back into the electricity grid.

Technical challengesAs evidenced by the considerable

flexibility of the SOFC system, it is not unsurprising that the biggest challenge in developing the fuel cells relates to the complexity of the materials science behind the technology.

“Finding the exact materials for the system to function, and function with increasing reliability is the technical challenge. Over the years CFCL has developed ceramics, metal alloys and a number of other materials that are critical for the operation of the fuel cell,” says Mr Rowe.

A prime example of the type of technical challenge has been matching the coefficient of thermal expansion between ceramics and metals in the stack to ensure that the materials do not bend or break when subjected to the high operating temperatures of ceramic fuel cells, up to 1,000ºC for SOFC systems.

“The company had previously developed metal-ceramic stacks but was limited by the available metal alloys and subsequently developed fuel cell stacks made chiefly from ceramic materials. This allowed the company to continue development of other parts of the system, such as power management and the safety system,” said Mr Rowe.

However, since then, newer materials have been developed, enabling the company to resume its development of metal-ceramic stacks that now are capable of producing double the power in a smaller package size. The company has reported that advances in power density have enabled it to increase the output from each of its fuel cell stacks to 2 kW of electricity, reducing the unit’s cost per kW and saving up to three tonnes of carbon dioxide per year. A 2 kW unit provides

ample power for the average household’s annual baseload requirements, as well as additional power for export to the grid.

The market for ceramic fuel cells

The major challenge in scaling up to the mass market requires coordination among all the different players in the gas generation and transmission industries.

“A disruptive technology like fuel cells requires coordination from every part of the business, from retail, through to generation management and financing. If today, CFCL had a product that met all the performance criteria, there would still be a delay as regulators and utilities considered how to connect, control and commercially package the technology for consumers,” Mr Rowe says.

He adds that from a market readiness perspective there are many facets to consider. “As many utilities and network operators know, managing the network can be a challenging task at times. If we look into the future, network operators need to manage the variable generation technologies such as wind, solar, wave power. For example: in a localised area if 100,000 uncontrolled 1 kW fuel cells were installed in people’s houses, that would add 100 MW that the utility would need

to consider. Then what about connection standards? Feed in tariffs? Government rebates?”

“If we look at deployment in Australia we are faced with a unique problem where the cost of energy is very low. As an example, the US Department of Energy listed the price of electricity in Australia in 2004 as $US0.09 per kWh, whereas the cost in Germany is roughly double and Denmark is more than three times as expensive compared to Australia,” Mr Rowe notes.

Despite the impact of low gas prices on immediate commercialisation within Australia, the Australian Government has supported the company with funding and export grants to technically develop the fuel cells. Moreover, the promotion of higher energy efficiency appliances may eventually shift the focus onto SOFCs in Australia, given their considerable potential when used as part of a combined heating and power system and as their ability to be used as part of cooling systems is further refined.

As Mr Rowe concludes “Fuel cells are not a silver bullet technology that will solve the world’s energy problems; they form part of a complete solution integrating with incumbent and future generation technologies.”


“Fuel cells are not a silver bullet technology that will solve the world’s energy problems; they form part of a complete solution integrating with incumbent and future generation technologies.”


OverviewEffective asset management of gas

turbines in Australia has been prevented due to a lack of understanding of hot gas path component degradation processes, life prediction methods and effective repair/refurbishment strategies. Without recourse to such knowledge, gas turbine users have had to rely on original equipment manufacturer (OEM) recommendations for component longevity and performance. Consequently, gas turbine users often dispose of hot gas path components based on elapsed time rather than on their condition.

Following feedback received at the annual IBC Australian Gas Turbine Users conference Quest Reliability (formerly

MPT Solutions) and the Australian Nuclear Science and Technology Organisation (ANSTO), as participants in the Intelligent Diagnostics Program of the Cooperative Research Centre for Integrated Engineering Asset Management (CIEAM) devised a three-year research project to understand:

How hot gas path components • degrade in service How life prediction methods can be • employed to extend component life How effective repair/refurbishment • strategies can be employed to reduce the cost of replacing components.

Industrial Gas TurbinesIn recent years the use of industrial gas

turbines has grown substantially as they produce a large amount of energy relative to their size and weight. Gas turbines also offer the flexibility of being able to run on multiple fuels such as natural gas, diesel fuel, naphtha, vaporised fuel oils, biomass and syngas.

In the last ten years the world-wide industry has chosen to adopt combined cycle power plants, placing gas turbine technology at the heart of power plant operation. Over 150 gigawatts of power plant have been installed replacing the old steam turbine plants which were previously the backbone of the fossil fuel power industry. This trend is set to continue.

The largest power turbines in use in Australia are the ‘Frame Type’ gas turbines. These industrial units range from 3 to 480 megawatts with efficiencies approaching 50 per cent, and up to 60 per cent in combined cycle mode. Considerable research into new materials and coatings and improvements in cooling design and cooling systems has enabled these efficiencies to be achieved.

Gas turbine construction consists of a compressor section where filtered air is compressed and fed into a combustion zone where a fuel and air mixture is combusted. Combustion is accompanied by a rapid expansion of the hot gas produced, which enters the turbine stages and produces rotational motion.

The zone from the combustor to the turbine exhaust is termed the ‘hot gas path’. The components within the hot gas path have to withstand the most severe combination of temperature, stress and environmental conditions. Hot gas path components, such as combustors, transition pieces, liners, seals, nozzles (vanes), turbine blades (buckets) and discs generally represent the highest risk of failure and are the major life-limiting components. Turbine blades, having the most severe combination of stresses and temperatures, are often the limiting component when it comes

A three-year research project is aiming to ensure the effective asset management of gas turbines through increased knowledge of hot gas path component degradation processes, life prediction methods and effective repair/refurbishment strategies.

Gas turbine asset management research

By Dr David Knowles

Quest jet turibine.


to setting operational parameters and determining maintenance and overhaul schedules.

Although there are significant maintenance cost savings to be made by the rejuvenation or repair of components, even further cost reductions may be made using condition and life assessment data to safely extend component life.

Interaction with gas turbine users

Interaction with the gas turbine community was essential in prioritising the research tasks and also resulted in placing emphasis on the need for gas turbine disc life management methodologies to be researched. Several major power and oil companies assisted by supplying ex-service components and detailed operating histories. The components supplied included nozzles, buckets/blades and disc sample materials.

The project was brought to a successful conclusion in 2007. It has delivered outcomes in several areas:

Life management strategies for hot • gas path componentsEffective condition assessment • methods for determining thermal exposure in relevant Ni-base superalloy hot gas path components thereby enabling remaining life to be determinedInitial retirement for cause assessment • methodology for steel turbine discs including proof of concept by case study.An understanding of the economic • benefits to be gained from utilising the appropriate repair of hot gas path parts for specific industrial units to extend useful life.

These outcomes were achieved by conducting applied and fundamental research that involved studying creep properties employing materials modelling and developing an understanding of grain boundary engineering. This work was undertaken with support from the New

Zealand Government FRST program. The mechanical properties of all components are fundamentally determined by the microstructure of the materials and coatings used. Gaining an in-depth knowledge of this microstructure at the nano-level was key to understanding both the time and stress dependent degradation processes experienced by hot gas path components.

Benefits for gas turbine usersThe research work performed

in this CIEAM project successfully established a technology platform to enable Australian gas turbine users to understand how hot gas path components degrade in service, how life prediction methods can be employed to extend component life and how effective repair/refurbishment strategies can be employed to reduce the cost of replacement parts.

Hot gas path components comprise the major maintenance and overhaul costs

associated with operating gas turbines. Knowledge of remnant life can be utilised in the risk assessment process for high value parts including turbine discs, nozzles, blades, combustion liners and transition pieces. Having the ability to be able to use repaired or refurbished hot gas path components which can be less than 25 per cent of the cost of purchasing new or being able to run existing components for an extended period provides significant cost saving benefits in the order of millions of dollars.

The outcomes of this research have been, and continue to be, promulgated to the Australian gas turbine community through a series of presentations and workshops. The benefits of adopting a life management approach as part of an effective gas turbine asset management strategy have been successfully demonstrated from feedback received from Australian gas turbine users.

Cross-section of a Frame Gas Turbine Gas Turbine Hot Gas Path Components

Quest jet turibine.


The conference was the largest to date, with approximately 2,500 attendees discussing the pertinent issues

facing the upstream petroleum industry, exhibiting their wares and achievements and celebrating the industry’s successes.

In the spotlight were the fundamental shifts occurring in international petroleum supply and demand patterns. With world energy demand expected to grow by 40 per cent by 2030, APPEA Chairman Colin Beckett flagged gas as the resource that will take Australia into the future.

“Environmental awareness is increasing along with a greater recognition of the role natural gas can play as a clean ‘blue’ fuel in reducing or offsetting greenhouse gas emissions,” Mr Beckett said.

He said the industry was committing to real targets in energising change, with gas proving a real solution for reducing greenhouse gas emissions. APPEA targets include making 70 per cent of all new power stations gas-fired, tripling LNG capacity to the Asia-Pacific region and doubling natural gas use for industrial purposes and resources processing.

However meeting such targets requires innovation and change and the breadth

of speakers at the conference presented delegates with a range of issues facing the upstream sector.

Government actionFederal Minister for Resources and

Energy, the Hon Martin Ferguson, addressed the conference in a wide-ranging speech that focussed on the challenges facing the industry and the solutions the Australian Government is implementing to overcome them.

“‘Energising Change’ is about seizing the opportunities we have to unlock the wealth of Australia's vast resource potential, particularly our natural gas,” he said.

Mr Ferguson addressed key issues including; energy security, regulation and approvals, foreign investment, climate change and investment in Australia’s energy sector including – infrastructure, skills, training and greater workforce participation.

The Minister also highlighted foreign investment, saying that the 21st Century is Asia’s century and that Australia can be a very important part of it.

Western Australia Deputy Premier,

the Hon Eric Ripper, also addressed the conference, highlighting the state’s key place in Australia’s petroleum exploration and production sector, with the state producing 69 per cent of national natural gas in 2007.

Mr Ripper highlighted the importance of domestic gas for the growth of Western Australia’s industry and economy, arguing that environmental concerns and the need to minimise greenhouse gas emissions will increase the importance of natural gas.

On the issue of nation-wide regulation and approvals, Mr Ripper said the Western Australia Government is not yet convinced that a nation-wide review of the system is required.

LNG and technological development

Liquefied natural gas (LNG) was a major focus of the conference, with many speakers addressing the issues surrounding the growth and expansion of Australia’s export gas markets.

Wood Mackenzie consultant Ben Hollins said Australia could be the next Qatar provided it addressed some of the challenges it currently faces. Turn to page 40 for a more detailed look at Mr Hollins presentation.

Technological development was another major focus of the conference. Chevron Energy Technology Company President Mark Puckett said that technological

‘Energising change’ was the timely theme of the 2008 APPEA conference and Exhibition in Perth, Western Australia, where gas was centre stage as a fuel to secure Australia’s energy security.

APPEA 2008 shows gas is energising change

2008 APPEA Conference and Exhibition.APPEA Chief Executive Belinda Robinson speaking at 2008 APPEA Conference and Exhibition.


advancements are making the previously inaccessible, accessible.

He said LNG projects have become bigger and more complex and involve intricate commercial arrangements, multiple partners and stakeholders, and billions of dollars in investment at a time of rising costs.

Shell Gas and Power Executive Director Linda Cook announced that the Prelude gas field could be the site of one of the first applications of Floating LNG (FLNG).

Ms Cook said that Australia is an example of a country where the energy industry faces a challenge in accessing a suitable onshore site for developments, particularly around the Browse Basin and the Kimberley coast. She said that FLNG has the potential to provide a lower cost development for small gas accumulations located far from shore and reduces a project’s environmental footprint.

“While it is still early days we are excited about the technology and its potential application in Australia and other regions around the world,” she said.

Meanwhile, APPEA’s target of tripling LNG production by 2017 did raise some eyebrows. Woodside Chief Executive Don Voelte said that the reality is that the target is impossible because of a lack of skilled workers, as well as a lack of contractors able to provide the big equipment required for major projects.

APPEA Chief Executive Belinda Robinson responded, saying that it would be defeatist not to aspire to the targets set.

An APPEA spokesperson said “The industry agrees with Mr Voelte that the aspirational targets for increased LNG production will not be achieved without

real action on the part of both industry and government to get projects off the drawing boards and producing oil and gas.”

In the spirit of the conference theme, the spokesperson added “We won’t throw up our hands and say the challenges are too great, we believe the industry strategy sets out a positive work program over the next nine years to achieve real outcomes and more LNG on the water.”

The futureClimate change was a major issue on

many presenters’ agendas. Ms Robinson said the Australian natural gas industry could help avoid 180 million tonnes of global greenhouse gas emissions per year by 2017 if it meets the association’s aspirational production targets for LNG and domestic gas.

However, adapting to a carbon constrained future has its challenges. Sessions highlighted that reporting of greenhouse emissions will require robust accounting and reporting to engender market confidence.

John Briggs from Blake Dawson Waldron noted that an emissions trading scheme poses real legal risks to project developments. Emissions may, he said, eventually be a factor preventing projects going ahead.

Despite the challenges facing the industry, the key to energising change is coming to terms with future challenges through discussion and debate. It was therefore fitting that the conference closed with a panel discussion on future energy challenges and the changing domestic outlook in a post-emissions trading context.

APPEA Exhibition.

Entertainment at the APPEA Glitter Ball.

The SEAAOC conference, Northern Australia’s largest and longest established petroleum conference,

is particularly opportune given the recent estimation by Federal Minister for Tourism, Resources and Energy Martin Ferguson that the failure to find new Australian oil and gas supplies will cost the economy up to $27 billion a year.

The Council of Australian Governments (COAG) has also agreed to reduce barriers to exploration, as international demand escalates. At its recent meeting in Adelaide, COAG agreed to have the Productivity Commission review upstream petroleum regulation where crude oil and natural gas projects involve more than one jurisdiction.

The review is fitting as SEAAOC will have a strong focus on the latest developments in oil and gas exploration and development. The 2008 conference, to be held in Darwin from 16 - 18 July will focus on key

developments in the Timor Sea, Browse Basin and North West Shelf and the export potential to supply the Asia-Pacific region.

Australia is ideally located to supply clean and plentiful natural gas to the Asia-Pacific region while offsetting greenhouse emissions. Darwin is already taking advantage of gas from the Bayu-Undan gas field, supplied to a new $1.75 billion LNG plant via a 500 km pipeline.

Northern Territory Government Chief Minister Paul Henderson, who will address SEAAOC, recently held high level talks with INPEX - one of the biggest players in the international gas industry - about piping gas to Darwin for LNG. “We’ve already attracted one gas plant in Darwin and I want to get another one,” he said.

Joe Marushack, President of ConocoPhillips Australia, the biggest energy company in the Timor Sea Region, will speak about the company’s development plans for the Darwin LNG

plant and future opportunities.The conference will also comprise case

studies, keynote presentations, panel sessions and interactive workshops by industry leaders such as ENI Australia Managing Director Eros Agostinelli, MEO Australia Managing Director Chris Hart, Nexus Energy Managing Director Ian Tchacos, Arrow Energy Managing Director Nick Davies, Oilsearch CEO Peter Botten, as well as representatives from ConocoPhillips, ExxonMobil and Shell Development Australia.

Each year the conference attracts hundreds of Australian and Southeast Asian offshore operators, oil and gas exploration representatives, pipeline owners/operators, energy generators, retailers and distributors; infrastructure and engineering companies, contractors, government regulators and representatives, and investors and consultants.

With oil prices spiking above $US100, gas is emerging as the focus of energy discussion. The 2008 South East Asia Australia Offshore Conference (SEAAOC) will provide a unique and timely opportunity to discuss the latest advances in gas exploration and development.

Gas the talk of the town

For further information on the SEAAOC 2008 conference please visit www.seaaoc.com


Gas Today brings you FutureGAS 2009, the event for Australia’s natural gas industry. The age of natural gas has arrived and FutureGAS 2009 will bring the entire Australian gas industry together for a premier event all about gas! FutureGAS 2009 is the ideal opportunity to network with key industry stakeholders, promote your business, discover new products and projects, hear expert presentations and discuss the issues facing the industry, from exploration and production through transmission to power generation, technology and domestic appliances.

For further information and to register yourinterest visit www.futuregas.com.au and tapinto Australia’s natural gas industry.

Connecting Australia’snatural gas industry

MARCH 2009, BRISBANE, AUSTRALIA

FutureGAS2009The Australian Gas Conference & Exhibition

Exports Domestic markets Upstream through transmission Commercial services


The study tour provides an opportunity for selected employees in the Australian gas industry to:

Increase their knowledge of the • industry through visits to overseas natural gas and related organisations.Assist in maintaining communications • and a flow of knowledge between appropriate overseas organisations and the Australian gas industry.Broaden their outlook experiencing • different cultures and touring with other Australians from different parts of the industry.

Gas Speak 2008AGIT will conduct the Gas Speak

Colloquium for 2008 at Old Parliament House, Canberra from Monday 22 September to Wednesday 24 September 2008.

Gas Speak’s objective is to encourage an awareness and knowledge of the gas industry in Australia by providing a forum for young people from all sectors of the Australian gas industry to present papers, chair sessions, conduct syndicate discussions and develop the art of self expression and communication.

This event continues the tradition of successful Australian Gas Association Gas Speak Conferences held since 1982. As a highly respected educational event, companies should encourage young up-and-coming staff members to apply.

The Australian Gas Industry Trust (AGIT) is offering three Overseas Study Tour awards in 2008 to Europe. In alternate years the Study Tour focuses on Europe, North America or the Asia/Pacific.

AGIT 2008 ActivitiesBy Moira Lawler, Secretary, Australian Gas Industry Trust

INFORMATION & APPLICATIONSTo apply or for more information on the AGIT Overseas Study Tour 2008

or the AGIT Gas Speak Colloquium 2008 contact Moira Lawler on +612 6272 1555 or email [email protected]

Visit www.agit.org.au to see reports from previous AGIT study tours.

Closing Dates Gas Speak 2008: 11 July 2008 / Study Tour Applications: 18 July 2008

AGIT FUNDING AvAILABLEAnyone wishing to apply for funding in line with the objectives

of AGIT should go to www.agit.org.au and download the funding proposal application form.

The objectives of the Australian Gas Industry Trust are to contribute to the advancement of study, education and research in the field of gas utilisation and application development and related fields as well as to recognise and support excellence in those fields.

Particular objectives of the Trust include:

Contributing to the personal • and professional development of individuals in the field of gas and related fields and encouraging them to pursue their field of expertise.Awarding prizes for excellence • in those fields.Supporting scholarship in • those fields including the grant of scholarships and other monetary assistance.

Promoting research and • invention in those fields.Providing financial assistance • to those studying or undertaking research in those fields.Dissemination of information • in those fields, including by conferences lectures and publications.Promoting an understanding of • those fields.

The 2007 Gas Speak Colloquium participants and mentors.

ABoUtthEAUStRALIANGASINDUStRytRUSt(AGIt)


The AGA Cylinder Certification Scheme introduces a much improved and traceable arrangement that has

also appealed to government regulators responsible for overseeing public safety in this area. AGA’s approach will result in an improved level of confidence in public safety outcomes without any additional costs to industry – in fact it will achieve a reduction in stakeholder costs!

With the introduction of AGA’s cylinder certification process, the industry is expected to achieve significant cost savings and reduced time to market. To assist readers understand the new scheme, the following provides a brief outline of the process.

How the scheme works

FulltraceabilityThe Scheme provides for AGA

coordination of all the required certification steps – from design verification through to the monitoring of every production unit to loading in Australian destined shipping containers. The system comprises the following:

Design verification • Regulatory acceptance• Type testing • Factory inspections• Test station certification and • monitoringOn-site Monitoring Inspections.•

AGA’s hands-on role during all these key stages ensures the best possible traceability of every certified production unit.

GovernmentacceptanceThe AGA Cylinder Certification Scheme

is recognised and accepted by the relevant government regulatory authorities.

Focus on safety critical aspectsThe scheme particularly focuses on the

safety critical aspects of the prescribed government regulations and also

additional safety aspects including: Verification of cylinder compliance as • well as compliance of its valves and safety componentsVerification of the surface coating type, • thickness and adhesion propertiesType testing of the cylinder, its valves • and safety components conducted by independent ISO17025 compliant laboratoriesVerification of cylinder – cylinder valve • compatibilityFactory and monitoring inspections • conducted in accordance with 17020 requirementsMonitoring of the AGA certified test • stations during conduct of AS 2337.1 inspection and testsDesign verification and inspection • records maintained at AGA ensuring full traceability.

AssuranceofacertifiedcylinderUnder government regulations,

suppliers of cylinders are held responsible and accountable for every cylinder they release into the Australian marketplace. The industry now has a scheme that will provide suppliers with a higher level of assurance and piece of mind than has previously been possible. Suppliers of AGA certified cylinders can be confident that all the required certification steps have been met, safety critical aspects have been verified, every cylinder produced is fully traceable and that Australian consumers will enjoy an enhanced level of safety.

CostCompetitiveAGA is a not-for-profit organisation

with a long-standing focus on product safety and reliability. Despite this primary focus, AGA routinely looks for ways to provide competitive product certification services. One way it does this is to review the steps required to achieve and maintain certification to see if they can

be varied to reduce costs whilst retaining an appropriate level of stakeholder confidence in the relevant product’s compliance. An example of this is the change to the ‘stamping’ requirements for individual cylinders. The AGA scheme is expected to deliver substantial savings in conjunction with improved regulatory confidence in product compliance.

Directsupplyofcylindersintomarketplace

Since the AGA Scheme provides a higher level of safety assurance, suppliers of AGA certified cylinders (unlike those relying upon other schemes) are able to arrange delivery directly from the manufacturer to their retail customers. This eliminates the need for excessive handling of container shipments throughout the supply process – yet another cost saving.

typesofCylindersThe AGA scheme covers most cylinders

referenced in AS 2030.1 and AS / NZS 1425. Contact the AGA office for further information.

howtoidentifyanAGACertifiedCylinder

AGA certified cylinders are identified by three unique marks as described below:

AGA launches cylinder certification scheme

By AGA Senior Engineer Billy Tabourlos

The Australian Gas Association (AGA) has recently launched a new product certification scheme that is designed to benefit importers, manufacturers and retailers of gas cylinders serving the Australian marketplace.

To find out more about the AGA Cylinder Certification Scheme, call the AGA on

+613 9580 4500 or visit www.aga.asn.au

(i) AGA Inspection Stamp stamped or imprinted on the

collar

AGA Certificate Number XXXX

(ii) AGA Logo and Certificate No.

included with the cylinder markings imprinted or in a

single colour

(iii) AGA Test Station Mark

stamped or imprinted on

the collar


AustraliathenextQatar?Ben Hollins, Head of European Gas and Power Consulting at Wood Mackenzie, addressed APPEA delegates with a presentation on Australian gas in a global context in which he said that while Australia could be another Qatar, it is“underweight” as a producer of LNG compared to where it ought to be.

Despite some uncertainty, Mr Hollins raised then answered the important question. Yes, he

concluded, the gas age continues. Summarising the situation he said that pricing uncertainties have delayed new investment decisions in the power sector and that this has slowed gas demand growth, particularly in Europe and North America. However he pointed out that given an explicit cost of carbon, gas has a competitive advantage over coal and that provided the supply is available, global

gas demand will continue to increase.Meanwhile, the globalisation of the

gas trade and declining indigenous production in the principal gas markets of North America, Europe, Japan/Korea/Taiwan and the China/India market, inevitably leads to a significant increase in import requirements. Significant growth in the demand for LNG is also apparent, with the demand forecast to treble by 2025.

The next major challenge is supply. Few countries appear able to respond significantly to the LNG growth opportunity given the particular issues faced by some nations and the broader problem of developing new LNG projects.

However Mr Hollins emphasised that Australia should be a big, long-term winner in the LNG supply business. Citing his reasons for this, Mr Hollins highlighted Australia’s substantial gas resource base with

significant ongoing exploration; its place as a stable, low risk, investment grade country; the lack of a national oil and gas company; government support of gas exports; its established record of LNG exports since 1989; and the relatively limited impact of domestic demand on export potential and its access to key Pacific Basin gas markets.

Australia, he said, has a real opportunity to be the next Qatar but it must address its own challenges, including upward pressure on project costs, permitting and approvals, shareholder alignment, reserves uncertainty and domestic market obligations.

Australian and international consultants imparted their wisdom at the recent APPEA conference in Perth, with key issues addressed at the conference including skills and migration and rising global gas demand.

Analysing Australia’s gas industry

RisingtothechallengeKPMG’s Oil and Gas Centre of Excellence highlighted a number of topics as trends and issues currently facing or emerging across the Australian oil and gas industry.

KPMG has flagged a number of issues facing the industry, including climate change, skills

and migration, taxation and effective project risk management.

Climate change reporting and disclosure: This has been highlighted by the company as a major issue with a recent KPMG report Climate change – Current accounting and tax issues for Australian business leaders finding that the Australian tax system needs to be updated in line with the development of an emissions trading

scheme to minimise uncertainties and ensure tax does not distort the emissions reduction objectives.

Staff shortages, skills and migration: Partner for Migration Practice Jason Berry addressed delegates on this issue in a presentation, ‘In search of Labour’.

Australia has a declining workforce and is about to reach a point where a significant number of workers retire, he said. Birth rates are also declining and the age of Australia workers is increasing from a median of 31 in 1986 to 37 in 2006 and a projected age of over 45 in 2051.

Mr Berry said that encouraging overseas migration is important to resolve the looming problem, as is a review of the visas available for the labour required for upstream projects. He said that while a number of industry bodies have undertaken work to identify

the impact of labour shortages and suggested strategies to address them, more needs to be done. He urged the industry to continue lobbying the Government.

Foreign investment: International players such as China, India and Japan are showing an increasing interest in securing Australia’s energy resources. KPMG has said that this creates both opportunity and challenges for local oil and gas companies seeking to grow in the region with heightened competition from often well resourced and financed companies looking to enter or grow their position here.

Other issues highlighted by KPMG include effective project risk management, the rise and impact of regulatory compliance, and the risks associated with offshore investment.

problem of developing

However Mr Hollins emphasised that Australia should be a big, long-term winner in the LNG supply business. Citing his reasons for this, Mr Hollins highlighted

ensure tax does not distort the the impact of


With the ever increasing pressures on government and business alike to find cleaner and more

environmentally friendly sources of energy, CSG is well placed to provide long term and sustainable electricity generation whilst only emitting half of the greenhouse gas emissions of traditional coal-fired electricity generators.

During the initial stages of the expansion of the CSG industry, the legal issues were generally regulatory in nature. The commencement of a new industry forced governments to move forward with a legislative regime within which the industry could operate.

This has been completed in most jurisdictions around Australia and has supported the rapid expansion of the industry. The next hurdle for CSG explorers and producers is a new generation of legal issues that a high growth industry attracts.

Competition for resourcesThe boom in CSG is not isolated to that

industry alone. During the same period, coal and mineral industries have also had the benefit of prosperous times. With both industries expanding rapidly, there is increasing competition for access to resources.

In Queensland, the petroleum and minerals legislation include provisions which allow for the co-ordinated production of both coal and CSG from the same area. This legislative regime has generally been successful in allowing CSG and coal producers to reach a commercial arrangement allowing exploration and production in overlapping areas.

However, the regime and the ability to reach commercial arrangements are not as successful when both parties are targeting the same resource (for example the same coal seam) and have similar time constraints. This is becoming particularly evident in overlaps between CSG and proposed underground coal gasification projects.

The competition for these resources is only likely to increase over time. While this is an issue which needs to be closely addressed and regulated by government, the CSG industry as a whole needs to be mindful of its need to co-operate, to the extent practicable, with other extractive industries that are competing for the same resources.

WaterStrong concerns have been raised by

government and landowner groups alike regarding the possible negative impacts of ground water extraction during the CSG production process.

Landowners are generally concerned that the extraction and storage of this saline water may result in contamination of potable aquifers from which landowners extract water for their stock and domestic uses. In particular, landowners are concerned about the storage of saline water extracted by CSG producers in specially constructed storages, which landowners believe are likely to leak.

In response to these concerns, governments have imposed more stringent regulations on the use of water extracted from CSG activities. Many CSG producers have implemented proactive initiatives to beneficially use

this water. These initiatives include supplying the water to coal companies for wash plants, to landowners for stock use (where the water quality is suitable) or treating the water by reverse osmosis so it can be used for town purposes.

Given the large quantities of water which is extracted by CSG producers, the concerns of landowners and government must be proactively addressed in order to prevent over regulation by government. Additional regulation will be more costly and time consuming for CSG producers.

Landowner concernsAs with the increased instances of

competition for resources which has resulted from the expansion of the CSG gas industry, there has been a significant increase in CSG activities on land in general.

This has resulted in a larger CSG footprint on freehold and leasehold land in the last five years and a steady increase in concerns being raised by landowners regarding the conduct of CSG activities.

These concerns can sometimes be an attempt by landowners to increase compensation payments but, in some instances, are based on genuine concerns regarding the performance of CSG companies.

CSG producers should ensure that there is a consistent and targeted approach to dealing with landowners across the industry. Poor past performance by one producer will significantly impact on the ability of other producers to maintain their working relationships with landowners.

A strong, reliable and, most importantly, bankable coal seam gas (CSG) industry in Australia is no longer just a pipe dream. It is a reality.

CSG – next generation legal issues

By Tony Nunan, Hopgood Ganim Lawyers

Tony Nunan is an Associate at Hopgood Ganim Lawyers specialising in Resources, Energy and Infrastructure.


The efficient transport of natural gas in pipelines across the world is critical to modern society. Achieving this, while incorporating high expectations for the levels of inherent safety and reliability that the communities these pipelines pass through, is dependent on reliable and safe, valves and actuators.

Across the whole delivery and distribution network there are many

different styles of valve and actuation systems in use. The type of system chosen will depend on the application and will also depend on the required performance and cost. On a trunk pipeline system there will be a mainline valve station located at strategic points in order to isolate sections of the pipeline. Valve stations could be located at compressor, booster and metering stations, at critical

points such as river crossings, and at various points in between. It may be necessary to isolate the pipeline for maintenance or for safety reasons, such as line-break control. Valves used for safety purposes are often called Emergency Shutdown or ESD valves. These mainline valve stations provide the critical protection that secures the safety of the environment and communities alongside the pipelines.

Because valve stations are often situated in remote locations, it can be difficult to provide the power needed to actuate them by electrical or pneumatic means. To address this issue, many of the actuators fitted to these valves utilise the high pressure in the gas pipeline as the source of power for the actuators. One such actuator is the Shafer® Rotary Vane Actuator from Emerson Process Management. This actuator has been proven in tens of thousands of critical long-term installations and provides reliable operation over a 50 year life. The Shafer RV-series is powered by hydraulic fluid which has been pressurised by the pipeline gas. Utilising hydraulic fluid as the power media offers significant operational advantages compared to the alternative approach of infusing natural gas from the pipeline directly into the actuators.

‘Gas over oil’ valve actuationThe Shafer RV-series gas over oil

actuator uses two external pressure vessels to convert pressurised gas into pressurised hydraulic fluid. When called on to close the mainline valve, the pressurised gas in the tank forces hydraulic fluid into the actuator’s closing port and rotates the valve spindle by a quarter turn. The opposing section of the actuator cylinder is also filled with hydraulic fluid, which assists in damping, or smoothing the torque output. At the end of the valve stroke the pressurised gas is vented to atmosphere. Pressurising the opposing vessel is used to drive the reverse actuator movement, and provide the valve opening sequence.

Direct gas valve actuationIn this alternative actuation

configuration, high pressure line gas is directly admitted into the actuator cylinder, filling the static volume. The cylinder pressure generates a thrust which operates the scotch-yoke mechanism of the actuator, moving the valve. The opposing cylinder will sometimes utilise a hydraulic fluid to smooth the actuator operation.

Regional Sales Manager for Emerson Process Management in Australia and New Zealand Spencer Jenner reviews the actuator techniques available for mainline gas valves used in critical applications.

Actuators for critical mainline natural gas valves

Emerson’s Shafer RV-series actuator is powered by hydraulic fluid which has been pressurised by pipeline gas.

The Emerson logo is a trademark and a service mark of Emerson Electric Co. The Shafer logo is a trademark and service mark of Emerson Process Management Valve Automation, Inc. ©2008 Emerson Electric Co.

Choosing an actuator for critical pipeline applicationsis a huge responsibility.

You weren’t thinking of choosing a cheaper option, were you?

When you need reliable, field proven actuators, the Shafer® line from Emerson is backed by 60 years of successful use in thousands of the most critical applications. Our rotary vane actuators are the most compact and efficient on the market, with torque output that remains constant over the full 90° stroke of the valve, making them ideal for ESD and linebreak applications. Designed for a 50 year life with minimal maintenance, and with an industry-leading 10 year warranty, why pay less for less? See for yourself at www.EmersonProcess.com/ValveAutomation

For details of our Local Business Partner in your area go to www.EmersonProcess.com/Australia


Advantages of ‘gas over oil’ actuation

The ‘gas over oil’ actuation principle has distinct advantages over ‘direct gas’ actuation in critical applications. With the gas over oil system, hydraulic fluid is the only medium to enter the actuator, thereby protecting internal metal parts from corrosion. Making use of hydraulic fluid also prevents contaminants and moisture from entering the actuator. Any moisture in the gas falls to the base of the pressure vessel where it can be drained off. In the direct gas system internal metal parts are exposed directly to pipeline gas, with all the contaminants and moisture contained within it. This can cause long term corrosion and moisture collecting in the actuator can freeze and cause a malfunction.

In the gas over oil system the actuator’s seals are constantly bathed in hydraulic fluid providing lubrication and extending service life. In the direct gas system the actuator’s seals are more prone to dry out and, this can be aggravated by corrosion or dirt on the metal surfaces leading to premature seal failure.

The growing awareness in several industries of the need to properly inspect and certify all pressure vessels containing high pressure gas has led to restrictions on the use of non-uniform pressure vessels such as actuator cylinders. The gas over oil operating system restricts the high pressure gas to the specifically designed pressure vessel, with the actuator housing only being pressurised with hydraulic fluid.

Gas over oil actuators work smoothly, with no jerky motion, because the non compressible hydraulic fluid provides precise speed and movement control. It also allows for easy installation of hydraulic hand pumps for manual valve operation when needed. Direct gas actuators without hydraulic dampening systems have no integral energy absorbing device, which is needed to ensure against the ‘stick-slip’ phenomenon. This can occur where valves have been static in one position over a long period and subjected to temperature cycling. When the excess pressure applied by the gas pressure finally frees the valve, it can swing over and impact on the end stop,

with consequent potential damage to the valve structure.

Expert advice for your application

These views reflect Emerson Process Management’s experience with valve automation in relation specifically to actuators intended for critical applications in natural gas pipelines. With a combined 100 plus years of experience, and an installed base of more than 100,000 actuators on gas transmission lines operating safely in many different environments around the world, the company’s expertise is considered impressive.

The concerns expressed about the use of direct gas actuation are based on the high potential or long term deterioration effects of corrosion, combined with eventual seal embrittlement and the prospect of fatigue from cyclic loading. Valve Automation has a 60-year history, with no pressure vessel accidents, associated with tens of thousands of gas/oil actuator installations in critical applications.

17-19 June 2008, Sydney Harbour Marriott, Australia

Clean Energy Australia is the all incumbent clean energy event focusing onnew sources for clean energy, clean energy technologies, investmentopportunities and strategies for driving investment in clean energyprojects/funds. This landmark event will attract senior executives fromthe industry to develop strategy and explore business models of growth.

If you are contemplating which clean energy event to attend in 2008,look no further.

Register at www.terrapinn.com/2008/clean_au or call +61 2 9021 8808

Today.

Save whenyou book yourcorporate group.Register your team and save up to $6,190

Silver sponsors: Researched and developed by:Lunch sponsor: Media partner:

Gi11140

Clean Energy Australia is the premier conference that will analyse the tremendousbusiness opportunities presented by the clean energy industry.


Intrinsic safety (IS) is a protection technique for safe operation of electronic equipment in explosive environments.

An intrinsically safe calibrator is therefore designed to be incapable of causing ignition in the surrounding environment with flammable materials, such as gases, mists, vapors or combustible dust. Intrinsically safe calibrators are designed for use in potentially explosive environments, such as oil refineries, rigs and processing plants, gas pipelines and distribution centres, petrochemical and chemical plants, as well as pharmaceutical plants.

The new ATEX and IECEx certified Beamex® MC2-IS Intrinsically Safe Multifunction Calibrator is a practical tool designed for field calibration and testing in explosive environments. It has calibration capabilities for pressure, temperature and electrical signals and it connects to almost 20 available Beamex intrinsically safe external pressure modules. The MC2-IS is a compact, lightweight portable calibrator with large graphical display, multilingual interface and full numerical keyboard. Calibration with the MC2-IS is fast and simple.

“Our customers have been asking for a straightforward, practical intrinsically safe field calibrator and that’s exactly what the MC2-IS is,” said Beamex Product Manager Heikki Laurila.

“It provides safety for the person using it, as it is incapable of causing ignition in an explosive environment. But while being safe, it still offers the functionality and performance of an industrial calibrator, as it has wide calibration and configuration possibilities.”

The MC2-IS is the second intrinsically safe calibrator the company has introduced. The existing Beamex MC5-IS is the all-in-one documenting calibrator offering superior functionality and performance compared to any other intrinsically safe calibrator.

A new intrinsically safe calibrator is ensuring safety on the field, while offering the functionality and performance of an industrial calibrator.

Safe and practical field calibration

Practical tool for calibration in hazardous environmentsThe Beamex® MC2-IS is a practical tool for calibration in hazardous environments with calibration capabilities for pressure, temperature and electrical signals. The MC2-IS is ATEX and IECEx certifi ed intrinsically safe multifunction process calibrator and it connects to almost 20 available Beamex intrinsically safe external pressure modules. The calibrator has a compact size and design.

[email protected]

BEAMEX® MC2-IS INTRINSICALLY SAFE CALIBRATOR

Practiin hazThe BeamexThe Beamexhazardous epressure, teis ATEX andprocess calBeamex intrcalibrator ha

BEAMEX® MC2-IS INTRINSICALLY SAF

AMS INSTRUMENTATION & CALIBRATION PTY [email protected] www.ams-ic.com.au

Portable calibratorsWorkstationsCalibration softwareProfessional servicesIndustry solutions


Forming the central nervous system of a gas chain, SCADA systems integrate a variety of crucial components including remote monitoring and control of wellheads, gate stations,

district regulators, pressure monitoring sites and metering of major customer sites.

The evolution of new vulnerabilitiesThe development of SCADA systems have developed in

response to the need to more efficiently monitor and control the state of remote equipment. To date, there has been an emphasis on maintaining the physical security of the system, in other words, the ability to automate the action of valves and other equipment so that a valve cannot be exposed to unauthorised use.

New vulnerabilities have arisen, in part because of this prioritisation of reliability and safety. As Product Manager for Verizon Business’s security division David Shaw notes, critical infrastructure operators naturally approach SCADA systems from an engineering perspective, which means there is an emphasis on availability over security.

“When we go to an electricity utility, the thing that’s driving them is 99.99 per cent availability so there is not the mind set for privacy. Because they’re using simple systems and everything is in real time, if you add auditing or monitoring to the process, it’s seen as a waste of resources,” says Jill Slay, a computer forensics specialist at the University of South Australia’s Defence and Systems Institute.

With lifetimes ranging from 15 to 30 years, the majority of SCADA systems have been designed without current security requirements as a priority. The rapid advance of technology and the changing business environment is driving major transformation in SCADA network architecture, introducing new vulnerabilities to legacy systems. In particular, the current push towards greater efficiency, consolidated production platforms and larger companies with smaller staffing levels is leading to changes in SCADA systems which are raising many questions about security.

Some of the other major trends exposing weaknesses in security systems include:

Increasing consolidation of previously separate SCADA • systems and of SCADA systems to other business networks to enhance the amount, detail and timeliness of information available to management, making them higher-value targetsIncreasing reliance on public telecommunications networks • to link previously separate SCADA systems is making them

more accessible to electronic attacksIncreasing use of published open standards and protocols, • in particular Internet technologies, exposing SCADA systems to Internet vulnerabilitiesThe interconnection of SCADA systems to corporate networks • may make them accessible to undesirable entitiesLack of mechanisms in many SCADA systems to provide • confidentiality of communications means that intercepted communications may be easily readLack of authentication in many SCADA systems may result • in a system user’s identity not being accurately confirmed.

Threats to SCADA systemsThreats to SCADA systems can come from a variety of different

sources but one of the major threats facing organisations comes from genuine mistakes made as a result of lack of training, carelessness or oversight.

SCADA systems are also vulnerable to generic Internet threats such as worms, trojans and viruses that infect systems. These can impact SCADA systems when they use the same software and protocols. This may not be the result of a deliberate attack, SCADA systems may be infected merely because they can be.

Additionally, SCADA systems are prey to recreational hackers, crackers and virus writers motivated primarily by the challenge and a fascination with technology. Cyber attacks can also be executed by ‘script kiddies’, who are primarily untrained and yet have hostile or thrill-seeking intentions towards almost anything connected to the Internet.

“The amount of information available on SCADA systems online provides such a large amount of information out there for those who want to find network vulnerabilities in critical infrastructure. The reality is that there is a wide dissemination of hacker tools which allows a greater number of people to hack these systems,” says Craig Scroggie, Symantec’s Senior Director for Asia Pacific and Japan.

Indeed, the variety of tools potentially exposes SCADA systems to insider attacks from employees or ex-employees who are disgruntled or for any other reason are a possible security threat in addition to corporate attackers that spy on competitors to gain a competitive advantage.

Supervisory Control and Data Acquisition (SCADA) systems are a critical component of all gas infrastructure. While there has been considerable emphasis on the physical security of these systems, it is important to recognise and manage electronic threats to security.

Protecting SCADA systems


Managing risks to SCADA systemsWhile it is difficult to completely minimise the risk caused

by some of the more unexpected threats, such as terrorist or activist attacks, threats to SCADA systems due to genuine mistakes and generic internet risks can be managed by a combination of effective planning, upgrading network infrastructure and training.

EvaluatetheframeworkusedtoidentifysecurityrisksConsidering the potential for security risks associated with

SCADA systems, it is important that there is a framework in place to identify possible risks for existing and new SCADA systems. As SCADA systems are becoming increasingly interconnected with the Internet and corporate networks, they are also becoming more exposed to Internet security threats and network vulnerabilities.

It is crucial for SCADA managers to put in place appropriate risk management strategies. Such strategies might include regular vulnerability assessments of SCADA systems, processes for patch management and configuration management, communication between engineering and IT departments, staff training and appropriate network architecture. In addition to assessing operational systems, regular assessments of SCADA system vulnerabilities should also be undertaken of corporate networks, web servers, and customer management systems to reveal unintended gaps in security, including unknown links between public and private networks, and firewall configuration problems.

EnsurethatengineeringandItcomponentsofSCADAsystemarecoordinated

Because SCADA systems have been designed as engineering systems which now incorporate information technologies, sometimes vulnerabilities have arisen because of a lack of communication between the IT and engineering departments. In many organisations the engineering and IT departments do not communicate on SCADA security matters. These two areas need to work closely together to ensure that SCADA systems have appropriate security arrangements.

New security threats mean new security responses. These may require skills usually not found in process control

personnel. Considering that SCADA systems are integral to business processes, it is important to note whether appropriate education and training is available. This applies at both the executive level as well as at the information systems and network management levels since it is likely that IT employees’ earlier education and training did not include many of the security issues that are now faced by SCADA systems.

More specifically, while firewalls, intrusion detection systems, and virtual private networks can all help protect networks from malicious attacks, improper configuration and/or product selection can seriously hamper the effectiveness of a security position. Finally, the network architecture should be robust and sufficiently adaptable to counter existing and new threats.

Under the umbrella of the Australian Government’s Trusted Information Sharing Network – www.tisn.gov.au – and the IT Security Expert Advisory Group – there is a special forum for owners and operators of SCADA systems within critical infrastructure sectors. This group is known as the SCADA Community of Interest and meets quarterly in a trusted environment.

This article is based on the CEO SCADA Advisory paper by the IT Security Expert

Advisory Group published in January 2005. For more information on the ITSEAG’s work on SCADA security, please contact the Secretariat

at [email protected]

Gas Technology Services279 Normanby Rd, Port Melbourne VIC 3207ph: +61 3 9647 9800www.gastechnology.com.au

R

Australia’s leading supplier of:

- Gas Flow Calibrations (2ml/h - 3000m3/h)- Pressure Calibrations (kPa - 14MPa)- NATA Endorsed Calibrations

Variable area meters

Mass flow meters

Orifice meters

Pressure testers

Provers

Turbine meters

Wet gas meters Wet gas meters

Australian manufacturer and supplier

of IEC-Ex Certified In-Line 846 Gas

Volume Corrector (right) and AusEx

Certified In-Line 909 Gas Data Loggers.

Calibration of equipment including but not limited to:

For further information register your details at www.gastechnology.com.au

Alternatively email [email protected] or contact Carolyn on 0413 045 826

IN-LINEEquipment

Gas Technology ServicesGas Technology Services

Digital LINbus interface

Optional Relay Board

Profile Capability

AGA 8 / NX19

In-Line 846 Gas Volume Corrector features:

APIA has been busy providing input on behalf of the natural gas transmission industry on the

NGERS. A series of discussions with Department of Climate Change officials, three submissions and an invitation for the Director of the Greenhouse and Energy Reporting Taskforce to speak at APIA’s recent Adelaide dinner demonstrate how seriously the industry is viewing the new system.

Under the NGERS, from 1 July 2008, any corporation will be required to register and report if:

it controls facilities that emit 25 • kilotonnes or more of greenhouse gas (CO2 equivalent), or produce/consume 100 terajoules or more of energy; orits corporate group emits 125 • kilotonnes or more greenhouse gas (CO2 equivalent), or produces/consumes 500 terajoules or more of energy.

Under the NGER, the corporation with the greatest authority to introduce and

implement operating and environmental policies is taken to have operational control over that facility and therefore be liable to register and report. It is expected that a facility operator will generally be taken to have operational control over a facility in preference to the facility owner.

The department’s draft technical guidelines have provided a default emission factor for high pressure natural gas transmission pipelines of 8.7 tonnes of carbon dioxide equivalent (CO2e) per kilometre of pipeline.

As part of the notes for this figure, the guidelines state that emissions from high pressure transmission pipelines may “occur as a result of compressor blowdowns for maintenance at compressor stations, maintenance on pipelines, leakage and accidents”.

APIA has had to consistently emphasise to departmental officials that, unlike distribution or network pipelines, gas transmission pipelines DO NOT LEAK.

Gas transmission pipelines generally have the following sources of greenhouse gas emissions:

Exhaust gases from compressor • drivers – gas turbines of gas enginesBlowdowns from compressors • stationsBlowdowns of scraper traps – • generally during pigging.

These emissions are typically measured and accounted for by pipeline companies as part of the gas accounting for shippers of system use gas and will, for most pipelines, be readily available for the purposes of the NGER.

This system-use gas, or operational emissions for gas pipelines, will vary with pipeline size and throughput and will depend on whether pipelines have compression facilities or not.

The pipeline industry takes its responsibilities as an active member of the energy sector extremely seriously and through APIA will continue to assist the Government develop and implement the NGER.

The Australian Pipeline Industry Association (APIA) has been working with the Federal Government to inform them of the issues peculiar to the transmission industry’s greenhouse gas emissions in the lead up to the National Greenhouse and Energy Reporting System’s (NGERS) implementation in July.

NGERS – implications for the transmission sector

By APIA Policy Adviser Danielle Kellahan


APIA RESPONDS TO GARNAUT’S ETS DISCUSSION PAPER

Commenting on the Garnaut Review’s ETS discussion paper, APIA Policy Adviser Danielle Kellahan has said that subject to the release of further modeling and detail on the operation of the scheme, the

proposal has the potential to provide the basis of a practical and workable ETS.

APIA has urged the government to make an early decision on the timing of its emissions trading program in order to provide certainty for business and encourage long-term investment. However APIA has had to

clarify to policy makers the difference in operational conditions between the gas transmission and gas distribution sectors. Ms Kellahan highlighted that the concept of ‘fugitive emissions’ has caused confusion

and that emissions from the natural gas transmission sector are limited to system use gas, that is, gas used in the operation of the pipeline facility, not fugitive emissions.

APIA also has concerns about Professor Garnaut’s paper in the treatment of contracts where pass through of costs arising from introduction of the emissions trading scheme is not allowed. APIA has recommended

that compensation provisions are provided until such time as the contracts are concluded or can be renegotiated.

After the inaugural Young Pipeliners Forum (YPF) held in May 2006, the group became a movement

within the Australian Pipeline Industry Association (APIA). It has state-based organisers and each state has a representative on a national YPF committee.

Its involvement in APIA ranges from informal get-togethers for the younger members, to representation at the range of APIA events held around the nation. It also organises tours of APIA member facilities to further broaden their knowledge of the industry.

The second full forum/seminar will be held in Brisbane on 22 May. The day-long forum will coincide with the APIA May seminar, which will cover Innovation and Technology in the pipeline industry. While the established members of APIA will attend the innovation and technology seminar during the morning, the YPF group will conduct an introductory session similar to the one held at the inaugural forum.

In the afternoon both groups will join for what promises to be an entertaining and informative session on the future

of the industry, looking at knowledge transfer, working smarter and working together. APIA has engaged the services of a professional psychologist to help the discussion along.

These intelligent and assertive young people are the future of the gas industry.

They have much to learn from the experienced members of the industry, but they also bring new ideas and a fresh approach to the business and APIA is determined to assist the development of the next generation of industry “experts”.

Young Pipeliners Forum – developing the future, todayThe gas transmission industry’s younger members are certainly demonstrating how pro-active they can be!


In 2006 young industry members gathered in Canberra, leading to the formation of the Young Pipeliners' Forum.


While natural gas accounts for around 29 per cent of New Zealand’s total primary energy

usage, quite a low proportion of this is used by households, with the major users being electricity generators and petrochemical manufacturers.

In part, this is because the New Zealand electricity industry has been subject to major reform, moving away from a structure characterised by fragmented, localised distribution and retail entities (and a dominant state owned electricity generator) to a structure of fewer network companies with competitive generation and retailing markets. Legislative reform has required formerly integrated entities to separate their distribution networks from their retail and small scale private generation activities.

In addition, the New Zealand Government has opted not to promote gas above any fuel, which has made it hard to push gas ahead of other alternative fuels, such as solar which have strong Government support.

A study commissioned by Powerco, New Zealand’s second largest electricity and gas distributor, has confirmed this claim, and found that consumers

are not likely to use gas because the fragmented and competitive nature of the retail market makes it hard for the prospective consumer to navigate a plethora of options. For example, consumers must decide what type of fuel to use (electricity, solar, LPG or natural gas) as well as find an appropriate supplier, then manage the purchase and installation of gas appliances.

Even when consumers choose natural gas, they are often deterred by the perceived high delivered price, which includes the line and variable charges. In New Zealand, the price of natural gas is approximately 60 per cent lower than electricity, however the additional line charge incurred by gas can cost the consumer approximately $500 per annum, on top of $350 per annum for the electricity line charges. This occurs before a consumer has even used any gas, making it uneconomic for small natural gas users. These charges have emerged because the major business driver of energy retailers is the acquisition of new customers through market churn. Very limited effort is applied to actively connecting new consumers, since the cost of acquisition is high and there is substantial risk that the consumer may

switch energy retailer. Additionally, the demand for qualified,

registered craftsman gasfitters to install gas appliances has created a high price for these trade services. The withdrawal of the New Zealand Government’s apprenticeship programs some years ago has resulted in a void of qualified, registered craftsman gasfitters which are depleting in numbers with limited apprentices entering into the trade. The impact is therefore that the costs of connecting to natural gas are not as competitive with other energy forms, such as electricity, or solar energy.

Despite the fragmented nature of the retail gas sector in New Zealand, Powerco is well positioned to improve residential accessibility to natural gas. In New Zealand, the company distributes natural gas to over 103,000 households, businesses and industries in the lower North Island. With a network of over 5,330 km, Powerco transports and distributes gas in the Taranaki, Manawatu, Horowhenua, Hutt Valley, Porirua, Wellington City, and Hawke’s Bay regions. The gas is drawn from the transmission system owned and operated by Vector.

As part of the GetGas campaign, Powerco commissioned a study to understand the needs of both the consumer and industry stakeholders, such as gasfitters, builders, specifiers and architects. By evaluating the needs of these market segments, it established customer centric processes and sales channels that make it easy to connect

Currently, New Zealand homes use less than 3 per cent of all natural gas produced in the country. In an effort to respond to this, Powerco has successfully launched the GetGas campaign.

Selling gas to New Zealand’s mass market

Images: Promotional material for New Zealand's GetGas campaign.


to natural gas for the consumer — in addition to developing a campaign to promote the benefits of using natural gas directly for heating, hot water and cooking.

The GetGas campaign was conceived in an attempt to generate awareness, provide accurate natural gas information and simplify the connection process. This served to address these gaps in the market by creating brand and product awareness through outdoor signage in new residential areas, vehicle branding, advertising, in-store collateral and posters.

Powerco also developed customer centric processes to proactively manage the consumer’s connection installation, including a website, and free helpline, which have simplified the connection process.

The second major prong has involved building relationships with service providers, including staging trade shows with appliance suppliers to demonstrate the ease of conversion as well as forging strong relationships with gasfitters and builders to influence natural gas connection installations on Powerco’s gas network.

The result has been a strong and positive market response to the GetGas campaign since it was implemented

in May 2006 with approximately 65 per cent of connections now coming directly through the GetGas channels. The customer-centric processes implemented have been recognised as contributing success factors to GetGas now identified as seamless and easy, removing the highly complex process to connect. Additionally, New Zealanders’ experience of using natural gas in the home is relatively high, with growth in new connections generated from new residential development areas.

In order to solidify natural gas as a major choice for households in New Zealand, the next major push should

be on the retail pricing of gas for consumers. However, the gas prices are set by energy retailers, making it difficult for gas distributor Powerco to manage consumer retention across its networks, although many industry analysts believe that wholesale gas price is likely to reduce. With the flurry of investment in exploration and development in the Taranaki fields and beyond, as well as the New Zealand Energy Strategy policy placing a moratorium on construction of any new gas fired generation and the push to use renewable energy (wind and hydro) for electricity generation, a surplus of gas is anticipated.

The final major influence on the gas sector is likely to arise from the impact of the Commerce Commission’s pending regulation of two major gas network businesses in New Zealand. The extent of the impact on opportunities to invest into growth has been hard to predict during this uncertainty. However, Powerco is maintaining the GetGas campaign, introducing a 40 m main to meter campaign and working with industry members to develop a generic gas strategy that can be implemented nationally, in an attempt to make gas a preferred energy choice for New Zealand households.

The GetGas campaign was conceived in an attempt to generate awareness, provide accurate natural gas information and simplify the connection process.


Discovered more than 100 years ago, the Taranaki Basin holds recoverable gas reserves estimated

at 5.5 trillion cubic feet (Tcf) through many different types of reservoirs ranging from large, deep gas targets to small, low-risk, shallow gas reserves. Currently, all of New Zealand’s gas is sourced from the Taranaki region.

The Taranaki Basin not only reflects the history of New Zealand’s gas production, but also holds considerable promise to continue supplying the country’s gas needs. Analysts have suggested that the basin is likely to house many significant sized resources and it is considered under-explored in comparative terms.

kapuniThe Kapuni onshore field, operated

by Shell Todd Oil Services (STOS), is the country’s oldest producing gas-condensate field. Located in Taranaki, about 85 km southeast of New Plymouth, the field contributes some 17.3 per cent towards the country’s gas production.

Though discovered in 1959, gas from the Kapuni field had a carbon dioxide concentration of approximately 40 per cent, and therefore required special processing. As there was inadequate natural gas infrastructure at the time, it was not until 1967 that a gas market was established and the field was brought onstream in 1970.

The Kapuni field has produced some 1,101 billion cubic feet (Bcf) of gas to date. Production plateaued in 2001 at approximately 1.05 billion cubic centimetres per annum (Bcm/a). Sixteen Kapuni field wells are distributed around the surrounding farmland on nine well sites. Gas, condensate and water production are fed by underground pipelines from these well sites to the Kapuni Production Station for processing.

MauiOf the 15 fields in the Taranaki basin,

the Maui field has historically dominated New Zealand’s gas production, recently producing approximately 57 per cent

of New Zealand’s total gas production. Located 35 km off the Taranaki coastline, the Maui field comprises two production platforms. The field was discovered in 1969, however full production from Maui began a decade later, with 14 wells drilled from the platform in a water depth of 110 m – considered a deep water platform at the time.

Over its life, the STOS-operated field has produced some 3,008 Bcf of gas and 19.8 million barrels (MMbbl) of LPG. Meanwhile, production from the field has been declining rapidly indicating the economic life of the field is much shorter than previously assumed – production declined from almost 5 Bcm in 2001 to 2.25 Bcm in 2006. However, last May, the Maui development proved up a further 60.8 petajoules (PJ) of gas. The update followed another 200 PJ increase in August 2006, which is equivalent to around two years’ national demand.

PohokuraThe decline of the Maui field has

prompted a flurry of exploration, but few

successful discoveries. One exception to this is the Pohokura Basin, which is located in the Taranaki Basin. The basin is New Zealand's largest undeveloped gas field and at current rates, the field rates as the third largest gas producing field in the country, producing approximately 8.6 per cent of the country’s gas production and has estimated recoverable reserves of about 700 Bcf.

The Pohokura-1 exploration well was

Over the last five years, New Zealand’s gas reserves have grown substantially, with the country having considerably more than the OECD average. This is in no small part due to the considerable exploration being done in the Taranaki Basin, which covers an area of 100,000 sq km, and includes both onshore and offshore fields.

Review of Taranaki Basin

Images courtesy of New Zealand Oil and Gas.


drilled in February and March 2000. A gas/condensate accumulation was discovered in the Kapuni Group. The well encountered a 130 metre gross hydrocarbon column and tested at stabilised rates of up to 17 MMcf/d and an average condensate of 68 bbl/MMcf of gas with an average carbon dioxide content of 8 per cent.

Development of the field has involved the drilling of three wells from a land-based site at Motunui and six from an offshore platform located eight km off the coast. The Pohokura partners, which include Shell, Todd and OMV, have also recently been permitted to continue to explore the Okoki structure, located a few kilometres west of the Pohokura wells.

Future Prospects: To Kupe and Beyond

Producing only 0.15 per cent of the world’s gas supply, New Zealand is considered a ‘small fry’ in the gas industry, despite having identified basins with strong potential. New Zealand Oil and Gas (NZOG) Chief Executive Officer David Salisbury believes this is because the geographical isolation of the country and limited infrastructure for the oil and gas industry meant that ‘big industry players’ tend to overlook New Zealand.

Mr Salisbury also believes that New Zealand has excellent prospects for further exploration in a safe and secure location and that further resources potential exists in the Taranaki basin as well as bigger potential in frontier basins such as the Kupe gas development and Pike River.

kupeThe Kupe gas field is one of New

Zealand’s largest undeveloped gas fields and is located 30 km off the New Zealand coast, south of Taranaki Basin. The field, which is being developed by a joint venture between Origin Energy, NZOG and Genesis Power, contains proved and probable (2P) reserves of over 230 PJ of sales gas plus considerable condensate and LPG, with additional reserves potential.

The development involves an unmanned offshore platform constructed above the Kupe Field production wells and a 30 km, 12-inch subsea pipeline that will deliver the raw natural gas, LPG and condensate to shore. The development drilling phase of the project was completed in late April. Construction is currently underway at the project after the green light was given by the joint venture companies in mid-2006 and is expected to be completed by mid-2009.

Over the last two years, a number of major changes have affected New Zealand’s gas market, which have impacted and are likely to continue to assert an impact on gas exploration and production in the Taranaki Basin. While exploration activity has increased over the last decade, the focus has generally been on small onshore prospects. Consequently, the wholesale gas market in New Zealand has moved from a stable supply of gas from the Maui and Kapuni fields under long-term contracts to supply from many more fields, under short-term contractual

arrangements, involving much smaller parcels of gas.

The change in the market has made impeded substantial offshore exploratory activity, where larger prospects are likely to exist because prior exploration activity has been limited. However, in order to stimulate more exploration, the New Zealand Government has reduced gas royalties from 5 to 1 per cent. This is likely to spur the re-examination of a number of offshore prospective basins by major gas explorers for the first time in over 20 years.

The final major development in the Taranaki Basin concerns the entry of new participants in the region’s upstream sector, notably including Australian company Origin and American company Pogo, which have both the capital and technical experience to venture further afield.

“A shift in technology and in the global market for energy means that New Zealand appears to have the potential for global scale oil and gas discoveries with associated export earnings,” said Crown Minerals Group Manager Chris Kilby.

In 2007, these trends have culminated in gas production increasing by almost 20 per cent to 160 PJ/a. This is expected to continue with the Pohokura field ramping up production and the development of the Kupe basin. Despite having a long history, the Taranaki Basin continues to have a bright future with sustained exploration in offshore prospects, and development of frontier basins.

kEyFACtS

Taranaki Gas Production: 3.9 Bcm

Proved Reserves: 29.67 Bcm

Since 1955, over 350 onshore and offshore

exploration wells have been drilled in the

Taranaki Basin.

The majority of the producing fields are

located onshore.

SMALLER NEW ZEALAND FIELDS

Field Operator Total GasProduction

McKee Shell Todd Oil Services 4.6 per cent

Tariki/Ahuroa Swift Energy 3.7 per cent

Kaimiro/Ngatoro Greymouth Petroleum 1.0 per cent

Waihapa/Ngaere Swift Energy 0.2 per cent

Rimu/Kauri Swift Energy 3.2 per cent

Mangahewa Shell Todd Oil Services 3.4 per cent

Turangi Greymouth Gas 0.3 per cent

Cheal Surrey Astral Pacific Energy estech Energy 0.03 per cent


The multibillion project will involve the development of the Pluto and Xena gas fields, located about 190

km from the Burrup Peninsula in the North West Shelf Area, which together contain approximately 4.5 trillion cubic feet (Tcf) of dry gas and approximately 48 million barrels (MMbbl) of condensate. Pluto will produce liquefied natural gas (LNG) for export and will also provide significant infrastructure for a domestic gas phase to supply the Western Australian domestic market in the future.

Development overviewPluto’s initial phase will include a

single LNG production train with forecast production of 4.3 MMt/a. The platform will be connected to five subsea big bore wells on the Pluto field, with first gas to be produced in late 2009. Capacity will increase to 5-6 MMt/a, but approvals have been sought for up to 12 MMt/a to allow for expansion.

Wellstream gas and liquids from the riser platform, including produced water, will be transferred via a subsea gas trunkline from the riser platform to shore for treatment in the initial years of operation. Once received at the onshore

gas processing plant, the gas, condensate and other liquids will be separated. The gas will be processed into LNG, and the LNG and condensate will be piped to storage and export facilities. These facilities may also be used to process other gas from fields where Woodside has a stake.

Offshore development drilling for the Pluto gas field will be staged,

commencing initially with three to seven wells and up to twelve wells in total as the field matures. Wellstream products will be delivered to an unmanned offshore riser platform located in water depths of 80-85 metres. The riser platform will not support any processing facilities but will be equipped with control systems to be provided by Honeywell.

Dredging commenced on schedule in late November and a number of major offshore and onshore contracts were awarded, including the Engineering Procurement Construction Management to a Foster Wheeler WorleyParsons joint venture.

Gas contractsLNG from the project will be primarily

delivered to Japan, under the multimillion dollar export deals signed last August with Tokyo Gas and Kansai Electric.

The agreement provides for the supply of up to 3.75 MMt/a of LNG from Woodside’s Pluto LNG development to Tokyo Gas and Kansai Electric for 15 years, beginning in late 2010. The agreement also provides an option to extend the supply contract for a further five years.

Last July, when Woodside gave the go-ahead to the Pluto project, it also approved

Last November marked the official start of construction at Woodside Petroleum’s $11.2 billion Pluto LNG Project. Poised to increase Australia’s LNG output by between 5 and 6 million tonnes per annum (MMt/a), the Pluto gas development represents a significant opportunity to further develop its valuable gas resources and access LNG markets in the Asia Pacific region.

Pluto LNG Project

WhEAtStoNELNGPRoJECtNottoUSEPLUtoFACILItIES

Chevron Corporation recently ended speculation about whether gas from its neighbouring Wheatstone field would be processed at Pluto.

While a number of industry analysts had suggested this was likely, Chevron has said that it will develop its offshore Wheatstone project through a new gas plant on the Western Australian mainland.

“After assessing a range of potential development options, Chevron is now working to commercialise its 100 per cent owned Wheatstone gas resource as a mainland greenfield LNG and domestic gas project,” said a

Chevron spokesman.

“Chevron looked at a range of third-party options but they did not offer the commercial and long-term strategic benefits of a greenfield LNG project,” he said. “In addition, Chevron needs to find commercial

options for all the non-Gorgon gas it has and that is going to come from discoveries west of Barrow Island, meaning the size and location of the Pluto plant won’t be suitable in the long term.”

Images courtesy of Woodside Energy Ltd.

Workers at Pluto.

the commencement of feasibility studies on an expansion of LNG capacity, through the addition of a second and third train – and a domestic gas facility to supply the Western Australian market.

The company committed about $300 million in additional infrastructure to facilitate future expansion for other Woodside or third party gas, allowing the onshore plant to operate as an open access facility with additional LNG trains. The size of subsequent LNG trains, and the technology used, will be evaluated during the study.

ChallengesThe development has encountered two

major technical challenges relating to the unique geological conditions in the Carnavon Basin.

“The variable nature of soil characteristics in the Carnarvon Basin made it challenging to develop a satisfactory platform foundation design for the Pluto LNG Project. An extensive geotechnical investigation program was used to arrive at the final design,” said a Woodside spokesperson.

“Secondly, the selection of a suitable pipeline route from the platform to the gas processing facility at the Burrup LNG Park, and pipeline stabilisation methodology, also posed technical challenges due to the severe metocean conditions that exist in the Carnarvon Basin.”

These challenges include strong tidal currents and severe winds in addition to highly mobile sediments in exploration and production. Furthermore, given the project’s location far offshore, it is exposed to marine conditions that are more difficult to predict including currents, which are determined less by tides and local winds, and more by large scale features of the ocean circulation.

Additionally, a project the size and

scale of the $12 billion Pluto LNG Project presents a myriad of challenges to both onshore and offshore development, however with careful planning these are able to be surmounted.

“The high level of activity in the resources sector in Western Australia made it essential for Woodside to make early commitments on key offshore contracts. This approach ensured that critical vessels required for activities such as well delivery, pipe and flowline lay, platform installation and subsea hardware installation were secured in advance to meet the project's schedule to deliver first gas by late 2010,” the spokesperson said.

“Given the competing pressure on the Dampier Port from multiple users, the offshore team is carefully planning and managing offshore logistical activities to ensure the project maintains its fast pace.”

Broader benefitsNot only will the development supply

a number of major markets both locally and further afield, the Woodside spokesperson noted the myriad of potential benefits.

“The Pluto LNG Project will provide a reliable source of clean energy to Woodside’s customers in the Asia-Pacific region.”

Beyond the environmental benefits of gas, Woodside has recently announced plans to make the project one of the most environmentally efficient LNG plants in the world with the co-development of a carbon sequestration plantation program to reduce the project’s emissions.

With first gas from Pluto expected by the end of 2010, Woodside has predicted its carbon emissions to increase to approximately 1.8 MMt/a. The company has reached a Key Terms of Agreement with CO2 Australia to invest up to $100

million over five years to reduce Pluto LNG’s environmental footprint.

The breadth of the environmental benefits of the development will also be matched by the economic benefits. The project is forecast to boost the West Australian economy by at least $28 billion over its lifetime and it will create up to 3,000 direct jobs during construction and 300 jobs during operations from 2010. Woodside also estimates a further 3,000 indirect jobs will be created, most of which will relate to services rendered in Western Australia.

“Woodside has also awarded a number of infrastructure fabrication contracts for the Pluto LNG Project to companies in Malaysia, Thailand, China and Japan that will create thousands of jobs for local people during peak construction,” the spokesperson said.

ConclusionWith industry analysts estimating that

LNG demand will triple as early as 2025, Pluto is well positioned to place Australia to service growth in the Asia-Pacific region by increasing its LNG output by potentially up to 12 MMt/a. Planning to commission the second and third trains of the Pluto project, Woodside expects to further capitalise on the myriad of economic and environmental benefits associated with the mammoth Pluto development, while surmounting both technical and broader challenges with judicious planning.

Woodside Chief Executive Don Voelte sums it up best when he notes that “Pluto is on schedule to be the fastest LNG project in the world from discovery to first gas, and the start of construction of the project is a very exciting time for Woodside.”



The Kupe Field is in exploration permit PML 38146, located in the same general area as the giant Maui

gas field which currently supplies most of the country’s needs. The field lies in 35 m of water, 30 km offshore, south of New Zealand’s Taranaki Peninsula.

Despite being discovered in 1986, the Kupe field remained undeveloped until quite recently because of the abundance of cheap gas from the Maui field. The combination of increased gas demand and a re-evaluation of the Maui gas reserves raised concerns about New Zealand’s future energy supply.

In June 2006, project approval was secured for the development, which is estimated to provide the New Zealand gas supply network with approximately 253 petajoules (PJ) of natural gas, as well as liquefied petroleum gas (LPG) and 15 million barrels (MMbbl) of light oil/condensate.

The $820 million project will involve installation and operation of new production wells, the installation of an offshore platform, the construction of an onshore production station, a shore crossing connecting the offshore pipelines from the platform to the onshore production station and a network of onshore pipelines. Commissioning is scheduled for mid-2009, with an initial

phase of production at a rate of 20 PJ/a of sales gas, 1.7 MMbbl/a of condensate and 90,000 tonnes of LPG.

Progress on offshore components

In December 2007, topsides for the Kupe offshore platform arrived at Port Taranaki. The large steel structure was subsequently installed on the wellhead platform jacket. The four-level unmanned offshore platform will be situated 30 km

off the Southern Taranaki coast.As part of the initial development phase,

three wells have been drilled by offshore drilling contractor, ENSCO International. The wells were drilled using the ENSCO 107 drilling rig, which also installed the wellhead platform jacket and the topsides of the offshore platform.

The Kupe Project drilling program was undertaken on a ‘batch-drilling’ basis, which involved completing the same depth of the Kupe South-6, Kupe

Though the Kupe gas field has long been the neglected little sister of the massive Maui gas field, this late-blooming development is poised to play a major role in New Zealand’s future energy security over the next 15 to 20 years.

Kupe Gas Project

Apache pipelaying rig Kupe Origin Energy.


South-7 and Kupe South-8 wells before proceeding to the subsequent depth for each well. This has been considered a more efficient approach than drilling the wells separately.

In March this year, the first of the three wells, Kupe South-6, reached a planned total depth of 3,385 m, with the Kupe South-8 well reaching a total depth of 3,834 m shortly after. In April, the Kupe South-7 well reached a total depth of 3,454 m, but was abandoned shortly after because of the failure to recover pipe that became stuck when making a connection after the well reached total depth. Subsequently, a sidetrack well was drilled to a final depth of 3,503 m. The well, renamed Kupe South-7 sidetrack, was directionally drilled away from the original hole and the reservoir section re-drilled.

Extending Kupe: The Momoho prospect

Given the drilling successes to date, it is not surprising that the Kupe Joint Venture has recently decided to undertake exploration drilling of the auspiciously-named Momoho prospect, which in Maori means fortunate or successful.

Located 6 km south of the Kupe Central Field and within PML 38146, if Momoho is found to be a commercial discovery it is likely to be connected to the Kupe platform and boost development from the field.

The well will be drilled to a total depth of approximately 3,150 m with primary reservoir targets in both the Farewell and Puponga Formations, the main hydrocarbon-bearing zone at the Kupe Field.

Pipelaying milestones and the road ahead

The second major component of offshore works has achieved a key milestone with the Apache vessel completing the final stage of pipelaying for the main offshore gas pipeline.

With a 12 inch diameter, the pipeline links the offshore wellhead platform to the onshore production station near Hawera through a tunnel drilled under the cliffs off the Taranaki coast. The Apache first laid the 30 km long umbilical pipe, which houses the controls, electrical and other components needed alongside the pipeline, and then the raw gas pipeline connects the offshore platform.

The pipeline laying was one of the development’s major challenges because of the height and steepness

of the South Taranaki coastline cliffs and active surf. The project proponents employed horizontal directional drilling (HDD) to lay the pipelines below the cliffs, which also aimed to stop any damage or erosion to the landscape. Two 30 inch diameter HDD holes were drilled next to each other for the raw gas pipeline and the utility pipes.

“The laying of the pipeline marks a major achievement for the Kupe Gas Project,” said Mr Ashford. “The three 10 km sections of pipeline have been laid quickly, without any serious delays. This is the result of meticulous planning and preparation by the whole Kupe Gas Project team.”

The development’s focus has recently shifted to its onshore components, with construction progressing on the onshore production station. The port of New Plymouth recently received six LPG Storage Bullets, each 40 m in length, 5 m in width and weighing 170 tonnes. These have been transported to the Production Station and piperack modules have been erected for the main process area. The erection of the condensate storage tanks has also commenced along with the installation of sales gas pipeline between the Kupe Production Station and the Kapuni Gas Treatment Plant.

With the successful completion of the project’s drilling phase and the achievement of a number of major project milestones — from offshore pipelaying to the development of the onshore production plant — the massive Kupe gas project is in good stead to help the Land of the Long White Cloud meet its increasing energy demands.

Project Proponents

Origin Energy Resources (Kupe) Limited 50 per cent (Operator)

Genesis Energy 31 per cent

New Zealand Oil & Gas Limited 15 per cent

Mitsui E&P (New Zealand) Limited 4 per cent

Project Timeline

June 2006 Approval to proceed

1Q 2007 Offshore platform installation commenced

2Q – 3Q 2007 Production well drilling

2Q – 4Q 2007 HDD shore crossing commenced

3Q 2007 Platform topside installed

3Q 2007 – 4Q 2008 Onshore production station construction

1Q 2008 Subsea pipeline installed

Completion of offshore drilling

2Q 2009 Commercial production

Kupe LNG bullets.


The NR2 Project will recover remaining low pressure gas from the North Rankin and Perseus gas

fields, which started producing gas in 1984 and mid-1990s respectively. The project will include the installation of a second platform, approximately 135 km offshore from Karratha on the northwest coast of Western Australia. Detailed engineering and procurement management services for the NR2 project will be conducted by Eos – a 50/50 joint venture of WorleyParsons and KBR.

Standing in about 125 m of water, the new platform will be a major offshore facility with a topsides weight of about 23,600 tonnes. J. Ray McDermott will construct the North Rankin B platform substructure and piles.

“Completing the North Rankin B substructure will be a major milestone for our Batam Island, Indonesia facility, as this will be the largest jacket ever built in the Southeast Asia region,” said J. Ray McDermott President and Chief Executive Officer Bob Deason.

Hereema Marine Contractors have been contracted to transport and install the new platform using the float-over method.

The NR2 project, which is scheduled for progressive start-up in 2013, will also include development of production facilities including gas-condensate coolers and separators, three 27 megawatt compression trains and power generation, a heli-deck and living quarters.

In October last year, Rolls Royce won a contract to provide gas compression turbines for the North Rankin platform. The three turbines, RB211-GT61 packages, are estimated to provide 44,000 horsepower of compression power on the North Rankin platform to help increase the flow of gas to Australia’s largest onshore gas plant at Karratha.

The proposed North Rankin B platform

will be connected by a 100 m bridge to the existing North Rankin A platform. The NR2 Project will also include necessary tie-ins and refurbishment of North Rankin A. Upon completion in 2013, both platforms will be operated as a single integrated facility.

North Rankin B will be built

substantially taller than the existing platforms that form part of the North West Shelf development, based on knowledge of cyclones and wave heights built up since the venture began supplying gas in 1986.

Woodside Chief Executive Don Voelte said the development project would continue to maximise the value of Australia’s largest resource project.

“This project will extend the field life of the North Rankin and Perseus fields and will support the venture’s onshore gas commitments to supply customers post 2013,” said Mr Voelte.

The North West Shelf Joint venture has given the green light to the $5 billion North Rankin-2 (NR2) Project, which aims to deliver high-value gas from the North West Shelf for another 25 years.

North Rankin-2 Project

Workers at North Rankin.

Images courtesy of Woodside Energy Ltd.


Calendar of EventsDAtE/VENUE EVENt CoNtACt

16 - 18 July, 2008Holiday Inn Esplanade, Darwin

SEAAOC www.woc.com

5-9 October. 2008Buenos Aires, Argentina

24th World Gas Conference [email protected]

11-14 October. 2008Perth

APIA Annual Pipeline Convention www.apia.net.au

20-22 May. 2008The Sebel & Citigate Hotel, Brisbane

CSM-CMM Conference & Exhibition [email protected]/commsummit

17-19 June. 2008Sydney Harbour Marriott, Sydney

Clean Energy Australia www.terrapinn.com.au/2008/clean%5Fau/

16-18 July. 2008Holiday Inn Esplanade, Darwin

SEAAOC www.seaaoc.com

11-14 October. 2008Perth

APIA Annual Pipeline Convention www.apia.net.au

12-13 November. 2008Novotel Brisbane

8th Annual Australian Gas Turbines Conference

FutureGAS 2009

March, 2009Brisbane

FutureGAS 2009The Australian Gas Conference & Exhibition www.futuregas.com.au

INthENEXtEDItIoNoFGAS TODAY

GAS SAFETY INSTRUMENTS &

ENGINEERINGFor more information, contact Gas Today before 4 July 2008

on (+61) 02 9248 5100 to be a part of this feature.

INthE NEXtEDI

For more information, contact on (+61) 02 9248 5100 to be a part of this feature.


SUBSCRIPTION AND INFORMATION REQUEST

Name: Job Title: Company: Address:

Telephone: Fax: Email:

I would like to subscribe to Gas Today magazine.

Please send me further information about the articles on the following pages:

Please either detach this page, or make a photocopy and send to:Great Southern Press Pty LtdGPO Box 4967Melbourne VIC 3001 AustraliaEmail: [email protected]

August 2008 November 2008 February 2009 May 2009

Focus Exploration and Transmission

Distribution and Networks

Retail andAppliances Coal Seam Gas

GasinAction Industrial Use Exports / LNG LPG /Transport Fuels Power Generation

RegionFocus Darwin and the Timor Sea Cooper Basin North West Shelf New Zealand

Products&Equipment

Gas Detectors, Leak Detection & Safety

InstrumentsGas Appliances Gas Exploration and

Drilling EquipmentExtractionEquipment

Services Engineering Construction Contractors

HR, Staffing and Recruitment

Commercial Services – Legal, Accounting,

Consulting

technologyFeature

Gas Processing / Compressors Coal Seam Gas IT, Software and

Communications

Gas Metering Devices, Flow

Control, SCADA

Deadline 4July2008 3october2008 5December2008 3April2009

Editorial Schedule

Every issue will include the latest news, in-depth project coverage, interviews, perspectives, financial and company information and more.

Adtech FRP Pty Ltd 21

Ampcontrol Pty Ltd 22

AMS Instrumentation &Calibration Pty Ltd 45

BW Technologies by Honeywell 7

Clarke Energy 11

CODMAH P/L 15

Deutz Power Systems 1

Diversified Construction IFC

Drake Personnel 9

Emerson Process ManagementAustralia Pty Ltd 43

Enerflex Process 19, 29, 35

Energen OBC

Flotech 13

Fyfe Pty Ltd 18

Gameco Pty Ltd 8

George Fischer Pty Ltd 23

FutureGAS 2009 37

PPI Corporation Pty Ltd 24

Terrapinn Australia 44

UT Quality Australia Pty Ltd 27

vipac 47

ADVERtISERS’INDEX

@

GreatSouthern

Press

Developing Australasia’s offshore gas - Gas Todaygastoday.com.au/pdfs/gastoday_may08_web.pdf ·...

Documents

Transcript of Developing Australasia’s offshore gas - Gas Todaygastoday.com.au/pdfs/gastoday_may08_web.pdf ·...