NWS gas supplies to take 60 days to restore after fire

Apache Energy reported it will be 2 months before partial gas supplies are restored following a fire and explosion that ripped through its gas processing plant on Varanus Island on Australia's North West Shelf.

Eric Watkins
Senior Correspondent

LOS ANGELES, June 9 -- Apache Energy Ltd. reported it will be 2 months before partial gas supplies are restored following a fire and explosion that ripped through its gas processing plant on Varanus Island, about 100 km from Karratha on Australia's North West Shelf.

"Our specialist team of engineers, including assessment and recovery experts, have made an initial assessment that partial restoration of gas supply is likely to take a couple of months," said Tim Wall, managing director, Apache Energy.

Apache reported the accident on June 3, saying that no one had been injured and 153 people were evacuated. It said the incident involved a pipeline transporting oil and gas from offshore production facilities to the island's processing facilities. Thirteen people remain on the island to monitor the situation, the company said.

Wall said the incident caused visible damage to piping infrastructure and to some supporting equipment. He said the firm's engineering team is working to determine the full extent of damage.

The operations at Varanus Island, which provide around 30% of Western Australia's domestic gas requirements, account for 330 MMcfd of gas and 8,000 b/d of oil; Apache's net production is about 200 MMcfd and 5,000 b/d.

"The majority of the gas delivered through Varanus Island is supplied to industrial customers," Wall said. He said Apache, which has declared force majeure, would keep the state government informed and would be in "ongoing dialogue with all stakeholders to reduce the impact on the state's gas supply as best as possible."

Woodside Petroleum Ltd., which operates the NWS venture and is now the state's only major domestic gas source, will be able to make up about 25% of the lost gas Apache Energy was producing before the explosion.

"There's minimal spare capacity," a Woodside spokeswoman said. "We're likely to supply up to 100 terajoules[/day], depending on the conditions of the day."

As a result of the accident, many mining operators in the region have been forced to switch to diesel power or to temporarily shut down operations.

Alcoa Inc., which sources about 25% of its energy needs for its Pinjarra and Kwinana alumina refineries from Apache, is said to be using diesel power to keep both plants at full capacity, while mineral sands miner Iluka Resources Ltd. Has shut down operations as it seeks an alternative source of gas.

Other companies that could be adversely affected include BHP Billiton Ltd., Newcrest Mining Ltd., Newmont Mining Corp., and Minara Resources Ltd.

It's the second time this year that industrial users have faced disruption to their supplies of natural gas. In January, an electrical fault shut down the gas plant at the NWS joint venture, which provides about 65% of the state's gas.

Contact Eric Watkins at hippalus@yahoo.com.

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