AGL is planning a project that will source gas at competitive prices from Australian and international suppliers for our gas customers in south-eastern Australia. The gas would be transported on liquified natural gas (LNG) ships from interstate and overseas, transferred to another ship (A Floating Storage and Regasification Unit – FSRU) and converted from liquid form back into gas on that ship and then piped into the existing transportation network.

Crib Point (Western Port) in Victoria has been identified as the preferred site for a gas import jetty and a feasibility study is now underway. If the project proceeds AGL is planning to invest approximately $250 million with construction commencing in 2019 and the terminal operational by 2020/2021.

The current outlook suggests that shipping LNG to south-eastern Australia will provide reliable, long term certainty for our customers and the market.

Location

Crib Point in Victoria has been selected as the preferred site for the import jetty and pipeline to connect to the transmission network. Crib point is best placed to serve Victoria, Australia’s largest gas market as well as take advantage of the existing pipeline network, industrial port facility and associated infrastructure. A new pipeline will need to be constructed to connect the import jetty at Crib Point to the gas distribution network in Pakenham.

Why import LNG?

At first glance, it would seem to make no sense to import gas from overseas when Australia is exporting large amounts of gas to overseas consumers. But this gas export trade together with other pressures which were unanticipated by the market, has impacted on available supply to, and prices for, our domestic gas market and we need to look for other options.

As background, in the mid-2000s, Australian gas producers signed contracts to export gas overseas to meet growing demand in Asia. At that time, prices overseas were much higher than they could charge in Australia. When these contracts to export gas were signed, it was expected that the supply of gas at home would continue to grow at a rate that would allow for both the domestic and overseas market needs to be met. Unfortunately, this hasn’t been the case.

Prices in Australia today are often in excess of the price customers in Asia pay, and this pressure will continue unless action is taken.

AGL does not produce gas for export overseas so is impacted by the current challenges in sourcing affordable gas to meet the needs of residential and business customers.

If AGL imports gas from interstate and overseas it will help Australian gas users by:

  • Making gas supply more certain for domestic customers
  • Introducing price competition and help put downward pressure on wholesale gas prices, which should benefit Australian consumers
  • Allowing gas from Western Australia and the Northern Territory to be imported to the east-coast gas market, as these regions are not connected by pipelines; and
  • Reducing the urgency to open up more gas fields in Australia.  
Project delivery

A feasibility study is currently underway to identify the risks associated with the project. This is being done in conjunction with the formal regulatory planning and assessment requirements.

Like all big industrial and resources projects the gas import jetty will carry some risks. The key is to identify, minimise and manage the risks to the greatest extent possible.

At AGL we believe it’s essential we are upfront about risks, especially with a project’s neighbours. There are economic, commercial and regulatory risks. If the supply or price of gas here or overseas changes to a great degree, the project might become unviable. Likewise, if the regulatory environment (either at a State or Federal level) changes then this may also impact the viability of the project.

Any environmental risks (including impacts to marine ecology, RAMSAR, water birds, seagrass and mangroves, emissions, air, water and noise) are being identified. Once identified, AGL will discuss these risks and impacts with the relevant specialists, consultants and community members to determine if mitigation or elimination strategies and solutions can be developed and implemented.

The FSRU will have specific risks (including environmental and safety risks) which we will need to understand and manage. A fact sheet is available which provides further detail on the FSRU.

If the project gains its required regulatory approvals and ‘final investment’ approval is granted by the AGL Energy Board then first deliveries of imported gas could happen early in 2020 in time to meet the peak winter demand. This time frame would require that everything goes smoothly with site preparation, sourcing of the FSRU, securing suitable LNG supplies, procuring and installing the necessary structures, plant and equipment and the construction of the pipeline. It is anticipated the pipeline construction and jetty upgrades would take at least 18 months to complete.

How does an FSRU work?

An FSRU is a Liquefied Natural Gas (LNG) storage ship that has an onboard regassification plant capable of returning the super-chilled LNG back into a gaseous state and then supplying it directly into the gas network via a pipeline.

FSRUs are usually permanently moored at a jetty, in this case it would be Crib Point, storing LNG at a temperature of -161 degrees Celsius in cryogenic storage tanks. The cold temperature keeps the LNG cargo in its liquid state until it is required for the gas network.

When it is time to convert the liquid back into a gas, seawater is used to warm the LNG causing it to return to a gaseous state. The heater is usually a ‘tube and shell’ heat exchanger where water is pumped around the shell of the heat exchanger and LNG passes through tubes. The difference in temperature between the inlet seawater and outlet seawater is initially about -7 degrees Celsius, this then blends back to ambient temperature.

An FSRU typically discharges gas into the network at a pressure of around 60-80 Bar and at 5 degrees Celsius. Working at full capacity, a 170,000 m3 cargo could be regasified in about six days.

When the FSRU needs to be refilled a second LNG tanker will moor alongside the FSRU at Crib Point and decant its load of LNG into the FSRU. It is anticipated up to 40 LNG tankers (depending on demand) would refill the FSRU in a 12 month period.

More information about FSRUs is contained in the AGL Fact Sheet: Floating Storage and Regasification Unit, including information on:

  • Ship dimensions and performance
  • Potential environmental impacts
  • Risks and advantages of their use
  • Use of ballast water.
Community

AGL is engaging with community groups and residents from the Western Port area during the feasibility stage. Details of upcoming community information sessions can be found in the upcoming events section. AGL is committed to sharing the reports produced as part of the feasibility study and regulatory approval process.

Interested people can also subscribe to receive email project updates.

AGL always tries to support the communities in which we work. One of the ways we like to support our communities is with an energy-focused benefit – this might be a solar and battery system for a local community building or project, for example. The second thing we will do is to set up a community fund. The value of the fund and distribution model to be used to manage the fund has not yet been determined but will be finalised in collaboration with the local community. There are a number for models used within AGL for Community Funds where the focus is upon a Community Representative Group making decisions on how the funding is shared.

Upcoming events

Gas Import Jetty and Pipeline Project

Drop-in information session – Hastings

 

When: Monday 22 January 6pm to 8pm

Where: Hastings Community Hall, 3 High Street Hastings

AGL are currently planning a project that will source gas from Australian and international suppliers to use in south-eastern Australia. Crib Point has been identified as the preferred option for the import jetty to accommodate this and a feasibility study is now underway.

If the project goes ahead, LNG will be transported by ship from interstate and overseas and transferred to a Floating Storage and Regasification Unit (FSRU) moored at the existing Crib Point jetty. An FSRU is a ship that can transport, store and convert LNG back into gas prior to releasing it into the domestic gas pipeline network. A new pipeline will be constructed between Crib Point and Pakenham.

AGL is hosting an information drop in session at Hastings Hall. Representatives from AGL, its pipeline partners APA and environmental consultant’s Jacobs will be on hand to provide information on the project, hear any concerns or ideas and answer any questions community members may have. If you have any questions, concerns or ideas please stop by between 6pm and 8pm for a chat with the project team.

FAQs

Will the Federal Government's gas export controls remove the gas supply problem?

The Government mechanism has been designed as an emergency measure to supply gas to the east coast of Australia during periods of gas shortages. It does not assist the long term contracting of gas that is fundamental to supplying customers with gas contracts.

AGL has advised it is closing its coal fired power stations. Is this LNG project just swapping gas for coal to generate electricity?

As the cost of renewable energy from sources like wind and solar continues to decline, it becomes the cheapest source of energy even without subsidies. To compliment renewable energy and ensure a reliable electricity system, flexible plant such as fast start gas turbines, hydroelectric dams or batteries are required.

Today it is cheaper to replace an old coal plant with a combination of renewables and gas peaking capacity, even with the current high gas prices. Importing gas will reduce the cost of generating this complimentary firming capacity.

How much would the project reduce gas prices?

The cost of gas delivered through this project will be dependent on the international price of gas. Our vision is that the east coast of Australia should never again face the situation where Australian manufacturing businesses are paying significantly more for Australian gas than their overseas competitors, as is happening currently.

Does the project carry risks?

Like all big industrial and resources projects the gas import jetty will carry some risks. The key is to identify, minimise and manage the risks to the greatest extent possible.

At AGL we believe it’s essential we are upfront about risks, especially with a project’s neighbours.

There are economic and commercial risks. If the supply or price of gas here or overseas changes to a great degree, the project might become unviable.

Any environmental risks are being identified and will be carefully managed.

AGL will prepare for and manage risks to water and air quality and minimise risks to flora and fauna as well as noise associated with the ship and the onshore equipment. As LNG ships typically use gas in their engines, unlike most ships that burn heavy oil in their engines, there is a lower risk of spills.

Safety risks will also require careful management. LNG contains large amounts of energy and under specific (and very unlikely) conditions has the potential to explode and burn.

Fortunately, very few incidents have occurred at LNG import terminals and there are currently hundreds of LNG ships safely operating, so these risks are well understood and can be managed. The LNG ships that will transport the gas incorporate advanced safety measures.

AGL always puts safety first. We will apply world’s best safety practices for operation of the gas import jetty and use independent experts to verify the design.

How was the proposed route for the pipeline selected?

Developing a potential pipeline involves a number of steps and assessment criteria before a final decision can be made on the route. For the Crib Point to Packenham pipeline (CPP) there were several route options that were initially assessed. The process of selecting the route involves an initial desktop review using geospatial data (e.g. satellite imagery, GPS) which is then supported by on-the-ground observation (from outside private property) to develop a preferred profile to assess.

Each route option is assessed against the following criteria to determine the optimal route:

  • Environmental considerations such as the extent of reserves, conservation areas, waterways and water courses, areas of environmental sensitivity flora and fauna and areas of endangered and threatened ecological communities and habitats
  • The number of roads and railways and their coexistence with other utilities
  • The number and type of third party infrastructure
  • Public and worker safety
  • Native title claims and sites and areas of known cultural heritage significance
  • The logistics for construction and operation and the terrain complexity and difficulty
  • Land use and land tenure including the number of privately owned land intersected and land usage types (e.g. residential homes, farms etc.)
  • Length.

Following this process, a preferred route is selected and submitted to the Department of Land Water and Planning, along with a consultation plan for engagement with potentially affected land owners for approval. Once approval is received, then and only then can the pipeline developers consult with property owners to gain access to the proposed route to undertake the detailed survey work required to finalise the pipeline route.

The current proposed route was selected as it minimised the impacts on exsisting and future land use by maximising use of existing easements and avoiding heavily congested road reserves, rail yards and future residential development east of Pakenham. Although not the shortest overall route to the network entry point in Pakenham, it has the least impact on orchards, vineyards and hobby farms and avoids the Trust for Nature property – Ted Harris walk.

Will land be compulsory acquired for the pipeline?

AGL will not build the pipeline itself, instead it will engage a pipeline developer to do this work. Part of our pipeline partner’s work will be minimise impact and to engage with any affected landholders to secure any required access. In some circumstances a pipeline developer may be given the right to compulsorily acquire and or access to land.

Will the pipeline impact the RAMSAR wetlands?

One of the reasons for selecting the Crib Point jetty as the preferred site is because it has an existing working port and jetty and pipeline easements. This means we don’t need to build new marine facilities or prepare any shore crossings. We are aware of the RAMSAR wetland area in and around Crib Point. There may also be other environmentally sensitive areas along the pipeline corridor. AGL will work with the community and the relevant government authorities to avoid or mitigate any adverse impact in these areas. This may include engineering solutions such as drilling the pipeline path rather than digging a trench. Where trenching is used, the land will be remediated so there are no ongoing impacts to landowners.

What studies is AGL undertaking as part of the feasibility study

We have a group of specialists assessing the impacts of the works that are to be undertaken at the port as part of the AGL Gas Import Jetty Project. This includes cultural heritage, ecology, noise, air quality, hydrology, traffic, visual impact and marine science. Once we understand the impacts, we can then develop mitigation strategies, engineering solutions or alternative solutions to address these impacts.

Our marine scientists are currently investigating, studying and reviewing information in line with regulatory requirements and questions raised by local communities and interest groups.

It is likely that the FSRU will use sea water to warm the chilled LNG in a heat exchange unit and return LNG to a gaseous state, with water being returned to the ocean cooler than the ambient water temperature. The area alongside to the FSRU where the cold water is returned to the ocean water is called the mixing zone. This zone is being studied to determine what impacts this will have on marine life and the environment and what level of water and temperature is acceptable without creating harm to wildlife. Studies are being undertaken to determine at what point this cold water will have mixed sufficiently with the sea water and will return to the temperature of the surrounding sea water.

Will there be an environmental effect study (EES) produced for the project?

AGL has engaged independent specialists to prepare studies to support a referral under the Environment Effects Act 1978. The Victorian Minister for Planning will then make an assessment to determine whether an Environment Effects Statement (EES) is required. AGL will also be making a referral under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act). The Commonwealth Environment Minister will then determine whether the project is a ‘controlled action’ or not and whether further assessment is required.

Will the import jetty affect access to the foreshore for pedestrians or areas around the jetty for recreational users?

The exclusion zone required for the gas import jetty project will affect access to the foreshore. The Crib Point jetty currently has an exclusion zone around it for operations of the United Energy berth (Berth 1). The permanent mooring of the FSRU at the jetty would see a more rigid enforcement of exclusion zones than currently exists although the final make-up of the exclusion zone has not been determined. As the FSRU would be moored more than 500m off the shoreline it is not anticipated that existing access to Wooley’s Beach Reserve would be impacted. To the north of the jetty an area approximately 90 metres wide will be fenced along the foreshore to accommodate the metering station compound. This would impact current access to the beach immediately adjacent to the jetty (which is currently included in the port exclusion zone). We anticipate that access to the remainder of the beach (including the beach we understand is locally referred to as ‘shelly beach’ would still be available via the submarine viewing access track off the Esplanade.

Where else do FSRUs operate?

There are approximately 22 FSRUs in operation internationally with their use spread across Asia, the Middle East, the South Americas and Africa. The closest FSRU operations to Australia are two FSRUs located in Indonesia.

Will ballast water be discharged into Western Port Bay

The LNG Jetty at Crib Point is for unloading only and there are no plans to export LNG. Ships will arrive full of LNG and will not need to discharge ballast water. Rather, they will take on ballast water in Westernport as they unload their cargo.

We are aware that all ships, even with full cargo, may have remnants of Ballast water on board as the bottom ballast tanks have an un-pumpable ballast spread across all the ballast tanks that can’t be pumped.

To manage this, ballast water is exchanged at sea (at least 200 miles offshore and in greater than 200m water depth) to ensure any aquatic organisms have been pumped out and tanks are backfilled with clean ballast – it is this clean “deep ocean” water that would remain in the tanks from discharge at the time of LNG loading.

As operations at Crib Point are not expected to commence until 2020 or 2021, we expect that the FSRU will have been fitted with a suitable ballast water treatment system in compliance with the International Maritime Organization Ballast Water Management Convention, which came into force on 8th September 2017.

At Crib Point, the FSRU will take ballast from Westernport and return ballast to Westernport as necessary to control the stresses on the ship’s hull. However, as it is always in a “harbour condition” it will not be exposed to seagoing stresses so will not need to take full ballast so the amount pumped in and out is reduced.

How many jobs will be created by the project?

AGL anticipates that the project will directly create approximately 40 new jobs on an ongoing basis once the project is operational. These roles will relate to the running of the ship and also, regasification process undertaken on the ship as well as security and other support roles. It is our preference to prioritise local employment if there are suitable candidates.

There will also be a number of jobs created during the construction phase. The majority of the construction workforce will be specialists that will be sourced from a range of locations across VIC and interstate.

Opportunities for local suppliers and employment will include a range of general trade and support services such as:

  • Vegetation management – clearing, mulching, rehabilitation
  • Fencing contractors
  • General civil – grader, dozer, excavator operators etc.
  • Water trucks.

AGL will require our partners and contractors to prioritise local sourcing of the above where suitable commercially competitive suppliers exist.

Where available, local suppliers will also be prioritised for general bulk construction materials (i.e. fencing materials, water tanks, geofabric, etc.).