Duke buys Bass Strait gas line project

Jan. 4, 1999
Duke Energy International LLC has acquired from BHP Petroleum Pty. Ltd. and Westcoast Energy Australia Pty. Ltd. the rights to develop and operate the Eastern Gas Pipeline project in southeastern Australia. The high-pressure pipeline will transport natural gas from the BHP-Esso Australia Ltd. gas processing plant at Longford, Vict., up Australia's east coast to Sydney (OGJ, Feb. 24, 1997, p. 45). BHP and Westcoast Energy each reached agreement with Duke for the transfer of its 50% equity

Duke Energy International LLC has acquired from BHP Petroleum Pty. Ltd. and Westcoast Energy Australia Pty. Ltd. the rights to develop and operate the Eastern Gas Pipeline project in southeastern Australia. The high-pressure pipeline will transport natural gas from the BHP-Esso Australia Ltd. gas processing plant at Longford, Vict., up Australia's east coast to Sydney (OGJ, Feb. 24, 1997, p. 45).

BHP and Westcoast Energy each reached agreement with Duke for the transfer of its 50% equity interest in the proposed line. Westcoast disclosed its selling price as $27 million (Canadian).

The pipeline will transport gas produced in the Gippsland basin fields in the Bass Strait. The fields are operated jointly by BHP and Esso. Duke expects to begin construction of the $270 million, 800-km line in mid-1999. Gas deliveries are slated to begin by mid-2000.

Underpinning the pipeline project is a new long-term gas transportation agreement between Duke and BHP-Esso. The agreement will allow gas from the Bass Strait fields to enter the New South Wales marketplace.

BHP has agreed to purchase some of the gas for use at its steel manufacturing and processing works in New South Wales-mainly at Port Kembla-and to satisfy its supply agreement with Sithe Energies Australia Pty. Ltd.'s Smithfield cogeneration plant (OGJ, Dec. 19, 1994, p. 38). Initial contract volumes will be 51 MMcfd.

The pipeline

It is estimated that only about 50% of proven Gippsland basin gas reserves has been produced. To date, production has been sold exclusively in Victoria. However, newly instigated gas reforms have removed barriers to interstate supplies. These reforms allow Esso-BHP to tap into the New South Wales gas market, Australia's second largest.

The new pipeline will also supply natural gas to 20 towns and communities along the route and help to create a larger, integrated gas market for southern and eastern Australia.

Following its acquisitions from BHP and Westcoast, Duke Energy will build, own, and operate the new pipeline, with sales focused on the New South Wales industrial market. The initial capacity of the pipeline will be 153 MMcfd, but there will be built-in potential to expand it to 255 MMcfd.

New South Wales now consumes about 280 MMcfd of gas, supplied by pipeline from the Cooper basin fields in South Australia.

Most of the development and planning work required for the new pipeline, including engineering design, is complete. An environmental impact statement has been reviewed by an independent commission of inquiry, and most approvals have been received in Victoria and New South Wales.

In addition, aboriginal consent has been secured for Crown lands along the route.

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