Queensland Favors Natural Gas for Power Generation (Update3)
By Stephen Wisenthal
Brisbane, Australia, May 24 (Bloomberg) -- Queensland's state government said it will require natural gas to be used to generate electricity, as part of a strategy to reduce greenhouse gas emissions and to promote a project to pipe gas from Papua New Guinea.
Electricity retailers will be forced to buy 15 percent of their power from generators fired by gas or renewable energy by Jan. 1, 2005, State Premier Peter Beattie said.
The government will also develop a large gas-fired power station at Townsville to use gas from the proposed US$3.5 billion PNG Gas project, which will bring gas more than 3,000 kilometers from the Papua New Guinea Highlands to Queensland state.
``This is the sort of sensible strategy that I think should be a national model,'' Beattie told reporters after releasing his energy strategy. Queensland will be ready when an Australian federal government eventually brings in restrictions on emissions of greenhouse gases, he said.
Queensland, Australia's third-most-populous state, currently produces almost all of its power from coal. About 80 percent of the state's generating capacity is owned by the government.
The Queensland government said it will work with the Australian Gas Light Co., Australia's largest natural gas distributor and utility, and Petroliam Nasional Berhad, or Petronas, the Malaysian state oil company, the companies developing the 2,500 kilometer Queensland leg of the proposed pipeline.
The cooperation aims to speed construction of the Townsville- to-Gladstone section and bring gas to Townsville about two years before the section to Papua New Guinea is set to be completed.
Financial Support
The Queensland government may provide financial support in return for a share of the eventual profits from the 800 kilometer Gladstone to Townsville section, a government spokesman said.
AGL plans to complete that part by mid-2002, to bring gas to Townsville as soon as it's needed for power generation, said Greg Martin, the utility's group general manager for infrastructure management and services.
``It secures two years earlier than would otherwise be the case, a key market in northeast Queensland for PNG gas,'' he said. Otherwise, other power projects might squeeze out the proposed gas- fired generator.
The terms of the government's participation in the Gladstone- to-Townsville segment will have to be agreed by the end of September when the steel pipe will have to be ordered to begin construction by next March, he said.
Coal Shunned
The government also said it won't approve new coal-fired generating stations unless a clear need can be demonstrated. Earlier this month, Powerlink Queensland, the government's electricity transmission company, said the state's surplus power capacity will nearly double by 2003 after three new coal-fired power stations are completed.
``The Queensland government has a number of conflicting issues,'' Carolyn Martin, associate director of rating agency Fitch IBCA, said at the Queensland Power & Gas conference in Brisbane, where Beattie outlined the energy strategy.
``As shareholders of the (electricity companies) they want to maximize dividends'' while they also want to reduce electricity prices and trim emissions of ``greenhouse'' gases thought to cause global warming, she said.
The biggest risk for utility companies operating in Queensland is the ``threat of changes in Queensland government policy,'' Martin said.
Final Contracts
The Queensland government's strategy will allow the PNG Gas partners to conclude final contracts to sell the gas, one of the last major hurdles for the pipeline project, said Peter Botten, managing director of Oil Search Ltd., the largest holder of oil and gas reserves in Papua New Guinea.
``Without an energy policy it's been very difficult for any of our customers and ourselves to finalize the contract terms,'' said Botten.
Oil Search and Chevron Corp. said last month they reached an agreement that will make Exxon Mobil Corp. and Santos Ltd. full participants in the PNG Gas project, one of the largest energy developments currently being planned in Asia.
The other big hurdle, apart from the sales contracts, is working out how much the PNG government will invest, and what stake it will take, in a US$1 billion company which will own the infrastructure such as pipelines and processing plants in PNG, said Botten.
``That is the final major piece of the jigsaw,'' he said.
Oil Search shares fell 6 cents, or 3.7 percent, to A$1.58, while AGL shares rose 12 cents, or 1.3 percent, to A$9.41.
quote.bloomberg.com |
