A $178 million (Aus.) natural gas pipeline is planned in Western Australia to connect the main Dampier-Bunbury trunkline with the Solomon Power Station in the Pilbara region.
The proposed 270-km line will be constructed by a joint venture of the DUET Group (57%) and TransAlta Corp. (43%). TransAlta is the owner-operator of the power station, which it bought from Fortescue Metals Group (FMG) for $357 million (Aus.) in 2012.
Currently, the power station runs on diesel. The plant will be converted to gas with this development.
Solomon supplies power to FMG’s operations in the region and the conversion to gas is expected to reduce the company’s operating costs by $22.45 million (Aus.)/year.
FMG has secured foundation shipper rights under the gas transport agreement that includes the flexibility to increase gas volumes.
The initial contract for gas supply has been written for 20 years, and the pipeline is slated to come on stream in early 2015. Construction will begin in July.
The development also involves engineering firm Monadelphous, which has signed a $100 million contract with the DUET-TransAlta group to help with the line construction.