Gas-sharing deal to help supply, profit
Santos operates the $18.5 billion Gladstone LNG project, while BG Group operates the rival $20.4 billion Queensland Curtis LNG plant.
In the first tangible sign of co-operation between consortiums building gas export projects in Queensland, the companies have agreed to link pipelines and share gas if needed.
The pipelines transport coal seam gas hundreds of kilometres east to each of the company's LNG plants.
All of the developers of new export gas projects are seeking to work co-operatively to rein in rising costs, which are undermining profitability.
The pipelines connecting the two projects with their gas supplies will be linked so that gas can be diverted between the two plants.
This will be especially useful when processing plants are shut down for maintenance or experience technical problems forcing a closure for a time.
There has been speculation Origin Energy is discussing a similar arrangement with British Gas, although this could not be confirmed.
"The interconnect points will enable gas to flow from one project to the other when necessary, for example to allow for LNG plant downtime and planned maintenance to occur without interrupting either project's gas field operations," said Rod Duke, Santos vice-president of the downstream portion of its project.
"Having two interconnects provides additional flexibility .. It gives more options to the plant operators for moving gas.
"Ultimately it means the two companies will be able to buy, sell and swap gas at these points during scheduled and unscheduled events, therefore maximising plant productivity."
If the talks between Origin and British Gas progress, this will link all three of Queensland's export projects, making Gladstone more of a hub, industry sources said.
The pipelines will be linked at The Narrows Crossing, near Mount Larcom in central Queensland, and on Curtis Island, where the processing plants are located.
"We expect that this will be just one of many mutually beneficial arrangements across the industry in the future," Mr Duke said.
Construction of the two interconnect points on adjoining easements is expected to be completed in 2014.
Frequently Asked Questions about this Article…
Santos and BG Group agreed to link their pipelines and share gas between the Gladstone LNG and Queensland Curtis LNG projects. The arrangement lets the two companies divert gas between plants when needed to help maintain output and manage costs.
The deal links Santos' Gladstone LNG project (valued at about $18.5 billion) and BG Group's Queensland Curtis LNG project (about $20.4 billion). There has also been speculation that Origin Energy may be discussing a similar arrangement with BG Group.
The pipelines that carry coal seam gas to each processing plant will be physically linked so gas can be diverted between projects. The interconnects will be at The Narrows Crossing near Mount Larcom and on Curtis Island, allowing gas to flow between plants when necessary.
Sharing gas gives operators flexibility to move gas during planned maintenance or unexpected shutdowns, enabling continuous field operations and higher plant productivity. For investors, that can mean better asset utilisation and a stronger defence against rising costs that hurt profitability.
The pipelines transport coal seam gas hundreds of kilometres east to each company's LNG processing plant.
Yes. If Origin Energy and BG Group reach a similar agreement, all three export projects would be linked, which sources say could make Gladstone more of a regional LNG hub.
The article says developers are seeking cooperative arrangements like these to rein in rising costs that are undermining profitability. Interconnects are presented as one practical way to improve efficiency and manage costs across projects.
Construction of the two interconnect points on adjoining easements was expected to be completed in 2014.
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