Papua New Guinea: NRG will be first customer for PNG gas in Gladstone
The National, Thursday August 20
BRISBANE: Australia's largest independent power producer NRG Asia Pacific said yesterday it would be the foundation customer in Gladstone for Chevron's multi-billion dollar PNG-to-Queensland gas pipeline project, with its development of a gas-fired power station there.
The announcement came as a surprise because it had been anticipated Comalco Ltd could shortly announce its intention to become the first anchor customer in Gladstone for the pipeline project. NRG was relatively new to the PNG pipeline project, engaging in discussions with Chevron only in the past few months, while Chevron had been negotiating with Comalco for about two years.
Chevron project director John Powell said the memorandum of understanding (MoU) with NRG would not affect ongoing discussions with Comalco for it also would be an anchor customer in Gladstone of the project.
NRG managing director and chief executive officer Keith Hilless said he expected the company's 368 megawatt gas-fired power station at Gladstone to be fully operational in the second half of 2001. The plant would have a capital cost of A$300 million (K400 million), Mr Hilless said. He would not disclose the value of the contract.
The power station would consume about 20 petajoules of gas per year and would provide electricity, steam and waste heat to existing and new industrial customers in the region. The Chevron project needed a total of 120-125 petajoules a year as foundation volume base and thus needed to secure Comalco and "a couple of other customers" in addition to NRG, Dr Powell said.
"We need additional volumes in Gladstone to provide the level of foundation volume that's required to underpin the economics of the project," he said.
Should Comalco decide to locate its planned alumina refinery and associated power station in Malaysia instead of Queensland, other potential customers existed in the Gladstone region, Dr Powell said. These customers would, in conjunction with the NRG project, enable the Chevron pipeline project to proceed on a volume basis, subject to the necessary approvals, he said. Chevron had been in discussions with a number of them for "some considerable time", he said.
"All I can say is that they would provide the sort of volumes when in conjunction with NRG offtake to underpin the Gladstone base," Dr Powell said.
However, Dr Powell said, "We're actively in negotiations with Comalco and I remain confident we'll secure their volumes in the near term."
Mr Hilless said synergies potentially existed between the Comalco and NRG projects.
"The way the volume issue has been going to date is that there has been a significant reliance on the total Comalco package for getting the volumes that Chevron is looking for," Mr Hilless said.
"In doing that, Comalco has looked at a structure for its project in which it has been driven by the need to get up volumes for gas used, and therefore they've looked at a combined co-power generation arrangement to utilise that total volume.
"Potentially with NRG moving in and suggesting that we can take up the responsibility for certain parts of that volume, it potentially then leaves Comalco in the position where it cannot necessarily look at having to contract such large volumes of gas."
NRG currently operated the Gladstone coal-fired power station as well as other power generation assets throughout Australia.
-AAP
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