Chevron Services Australia Pty. Ltd., operator of the Papua New Guinea Gas Project, has taken a major step towards a green light for the proposed natural gas pipeline across Torres Strait between Papua New Guinea and Queensland, Australia.
Chevron last week signed a memorandum of understanding for the supply of gas to Comalco's proposed alumina refinery at Gladstone, Queensland.
The MOU with Comalco follows a similar MOU signed last month for the supply of gas for a power project being developed at Gladstone by NRG Asia Pacific. It also follows a heads of agreement signed in July between Chevron and the Queensland state-owned Stanwell Corp. for supply of gas to a new power station in Townsville, to the north of Gladstone.
The three deals mean that Chevron has now attained a foundation market volume of over 66.5 bcf/year of gas to support the pipeline project. In addition, negotiations are continuing with several other potential industrial customers in Gladstone and Townsville.
Latest deal
The Comalco arrangement has always been seen as important to the success of the project, and the two companies have been in negotiations since signing a collaborative agreement in May 1997. Chevron said last week that the MOU with Comalco is for the initial supply of at least 25.65 bcf/year of gas.The proposed 368-MW NRG Asia Pacific power station in Gladstone will consume about 19 bcf/year of gas to provide electricity, steam, and waste heat to existing and new industrial customers in the region. It is expected to be in service in second half 2001.
Stanwell's proposed $500 million (Australian), 766-MW power station at Townsville (to be called the Pinnacles Power Station) will be built in a joint venture with Dynegy Power Corp., Houston. It, too, is to be on line in 2001.
Project details
The pipeline megaproject will transport gas from the PNG highlands (initially from the Kutubu development project fields) across Torres Strait to Cape York and then down to Townsville and Gladstone on Queensland's central eastern coast (see map, OGJ, Oct. 21, 1996, p. 28).LPG and condensate will be extracted from a plant installed in the Gulf of Papua. Condensate will go directly to the existing Kumul export terminal, while LPG will be sold domestically in Papua New Guinea as well as for export.
Support for the project has also been given by the respective governments, with the recent signing of a tripartite MOU by the governments of Papua New Guinea, Australia, and Queensland.
However, Chevron says it still needs to finalize a number of other agreements and obtain a range of approvals before the project is a certainty.
Participants in the PNG Gas Project are BHP Petroleum (PNG) Pty. Ltd., Chevron Asiatic Ltd., Mitsubishi Oil Co. Ltd., Mobil Exploration & Producing Australia Pty. Ltd., Oil Search Ltd., Orogen Minerals (Kutubu) Pty. Ltd., and Petroleum Resources Kutubu Pty. Ltd.
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