Firms to study Thai onshore gas line

A plan to lay a new intraregional gas pipeline in Thailand has taken a major step forward with three firms agreeing to pursue the project by conducting a feasibility study.

Thailand's state-owned Petroleum Authority of Thailand (PTT), Unocal Corp. unit Unocal Asia-Pacific Ventures Ltd., and Japan's Nissho Iwai Corp. signed a memorandum of understanding in Tokyo last month to carry out the feasibility study for the onshore gas line.

The group will study the feasibility of building a pipeline from Thailand's eastern seaboard to carry natural gas from the Gulf of Thailand to mining and related industries in the northeastern region, according to PTT and Unocal officials.

The study would also include the feasibility of laying fiber optic cables alongside the pipeline in order to increase the communications potential of the region.

Unocal and Nissho Iwai have completed a preliminary feasibility study for the project, which altogether may cost as much as $1 billion to develop. Further studies with PTT will determine the economics of building and operating the pipeline system.

The planned pipeline would be several hundreds kilometers in length, stretching from Mab Ta Phut in Rayong (where the offshore gas pipeline comes ashore) to Udon Thani in the northeast via Saraburi, Nakhon Ratchasima, Khon Kaen, and Chaiyaphum.

The scheme has been spearheaded by Deputy Prime Minister and Industry Minister Korn Dabbaransi, who wishes to use the gas grid as a catalyst to economic development in the region-stronghold of the Chart Pattana party, in which Korn serves as a deputy leader.

Stimulating industrial growth

The offshore gas would help spur a range of mineral and chemical production including potash, rock salt, soda ash, caustic soda, and ammonium chloride in Chaiyaphum province. It also could be used to fuel other industries elsewhere in the northeastern region.

"We are confident that the supply of energy will not only expand the mining industry but also create the conditions for new industries to start up as well," said John Vandemeer, president of Singapore-based Unocal Asia-Pacific Ventures.

Korn has earlier floated the idea of building an oil pipeline along the gas line. However, that proposed project is not included in the current feasibility study.

According to Vandemeer, expenditures by the co-venturers could reach $1 billion if all elements of the project were built.

Unocal first

If the project went ahead, it would be the first entry for Unocal Thailand into the Thai natural gas transmission and distribution grid, which has been monopolized by PTT for nearly 2 decades.

Chitrapong Kwangsuksatit, PTT deputy governor for planning, said that pending positive result of the feasibility study, which is due for completion by October, the three parties would sit down to discuss how the project should best be executed.

A joint venture company would be set up to implement the scheme. However, the partnership will not be limited only to PTT, Unocal, and Nissho Iwai, he said.

He added that investment required for installing the fiber optic system along the gas line is not that high, relatively speaking, "...but will be greatly beneficial to the future development if the gas pipeline was laid."

A significant portion of the offshore natural gas that would be delivered to the northeast via the planned pipeline would be from Unocal Thailand's gas fields in the Gulf of Thailand. Unocal is currently the largest gas producer in Thailand, delivering about 1 bcfd of gas to PTT.