Jemena and Senex fast-track domestic gas

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Explorer and developer Senex has teamed up with Jemena to bring gas from its Project Atlas resource to market through the construction of a new pipeline and gas processing facility.

enex was awarded the Atlas acreage, in south-east Queensland’s Surat Basin, by the Queensland Government in September 2017 following a competitive tender. Atlas is a high-quality resource and Senex is developing the 58 square kilometre block for the Australian domestic gas market.

After a competitive tender process, in June 2018 Jemena was selected as Senex’s preferred partner to build, own and operate the Atlas Gas Processing Plant and Pipeline (AGPP). The new pipeline will provide direct access to the Wallumbilla Gas Hub, offering Senex flexibility to sell its gas to a broad range of Australian gas customers.

A model of efficiency

Jemena’s approach to develop this project by pursuing the build, own, operate business model for open access gas processing and compression infrastructure make it quite unique.

According to Jemena’s General Manager Business Development, Dave Green, the upstream gas industry has been calling for a capable operator to step into this space, and the open access model should drive greater capital efficiency in the development of this type of infrastructure.

Importantly, it means that gas upstream developers can focus their attention and resources on exploring for gas, and it also means that these projects need not incur significant upfront infrastructure costs.

Historically, gas projects typically build their own dedicated gas processing and compression facilities. This is the type of inefficiency that saw three LNG projects developed side by side in Queensland, each with its own gas transmission network, jetty and liquefaction facilities on Curtis Island. And ultimately, it is gas customers who end up paying for these capital inefficiencies.

For the AGPP, Jemena identified other potential users of the facility in this particular area of the Surat Basin, and is designing the facility such that the infrastructure is designed for expanded use, so that new customers can cost-effectively be connected to the facility.   

An appealing partnership

In its proposal for the AGPP, Jemena endeavoured to offer Senex as much flexibility as possible in terms of whom they could market their gas to, by offering a multi-asset gas transportation agreement.

This provides transportation access to Jemena’s broader Queensland pipeline network, by connecting the Atlas facility and pipeline to the Darling Downs Pipeline at a nearby section of pipeline that had available ‘trapped’ capacity, that could otherwise have not been accessed if not for this connection. This also avoided needing to incur costs to build additional capacity within the existing pipeline network.

Jemena’s Queensland pipeline network includes the Queensland Gas Pipeline, stretching 627km from the Wallumbilla gas hub to the Gladstone domestic city gate, and the Darling Downs Pipeline, stretching 292km from the Darling Downs Power Station at the eastern end of the network, to the Wallumbilla gas hub and Spring Gully north of Wallumbilla.

Once connected to this network, Senex will have a direct route from its Atlas tenement to the Wallumbilla gas hub, and from there access to:

  • The large Australian industrial gas customers along the QGP who require long-term, affordable gas supply to support their chemicals, aluminium and alumina production plants
  • Access to southern gas markets via direct connections to the South-West Queensland Pipeline at various delivery pressures
  • Access to customers on the Roma to Brisbane Pipeline
  • Access to the Darling Downs Power Station
  • Access to the APLNG and GLNG projects

Senex Energy Managing Director and CEO Ian Davies.

Building the network

Jemena will invest around $140 million to build the gas plant and 60km pipeline, which will be capable of initially transporting approximately 40TJ of gas per day. Around 200 jobs will be created during the planning, construction, and commissioning phases of the AGPP, which will bring new gas to the domestic market by late 2019.

Construction will occur in two discrete parallel packages: the processing and compression facility, and the gas transmission pipeline. Construction of the processing and compressor station is set to commence early in 2019, while pipeline construction is planned to commence in mid-2019. The remainder of 2018 will be used to complete approvals planning, progress the procurement of long-lead items and detailed design.

Initial requests to market have been for principal construction contractors for the pipeline construction package; and for the processing and compression facility package. These tenders commenced around May this year.

Jemena intends to formally engage the pipeline contractors shortly for early contractor involvement to support the design and approval processes, and to shortlist the processing and compressor station contractors later this year.

Supplying the domestic market

With the development of the gas field, Senex and Jemena will initially be delivering approximately 32TJ/day to domestic gas market – about the equivalent gas supply of the daily needs of a large industrial user such as a fertiliser plant or an aluminium smelter.

Senex Energy Managing Director and CEO Ian Davies said “We are extremely pleased to be partnering with Jemena to fast-track Project Atlas to provide additional gas volumes into the domestic market.

“Last year we made a commitment to deliver gas to the domestic market by the end of 2019. We are systematically bringing together all the critical elements to do just that.

“This investment will not only create new jobs and support the local economy in the Western Downs region, but will result in generating royalties and benefits beyond the region and the state.”

Jemena’s Paul Adams said the AGPP will provide additional volumes into the domestic market for a range of commercial and industrial gas users.

“The Atlas gas field is the first of 13 gas exploration tenements awarded by the Queensland Government as part of a broader move to fast-track the development of new gas to the domestic market. Jemena will construct the AGPP on an expedited schedule in order to deliver first gas by the end of 2019,” said Mr Green.

Jemena’s Paul Adams.

Northern pipeline strategy

This latest pipeline represents another piece in Jemena’s northern growth strategy, which is centred on developing an interconnected supply chain of gas infrastructure assets across northern Australia.

“We know there is continued demand for gas across the east coast and that northern Australia will play a leading role in meeting this demand by bringing new gas to where it is most needed, via the most direct and economic route,” said Mr Green.

“The AGPP is another crucial addition to our plans in northern Australia and allows us to play a leading role in bringing a new source of gas supply and greater competition to the market.”

In July, Jemena completed construction on the Northern Gas Pipeline (NGP), with all 622 km, and approximately 34,000 lengths of pipe, being welded, lowered in and fully buried in the trench.

The NGP will initially bring around 90TJ of gas to the east coast, and Jemena is already progressing plans to expand and extend the NGP so that it can transport around 700TJ of gas – that is enough gas to meet the average daily gas needs of Sydney, Brisbane and Adelaide combined.

First gas is set to flow through the pipeline before the end of the year.

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