State of Western Australia opposes new pipeline plan

Feb 10, 1997 01:00 AM

The state government in Western Australia is opposing a A$1 billion ($ 760 mm), US-backed project because it would lower the sale price of a government pipeline. US energy group Pacific Gas & Electric Corp. (PG&E) said recently it planned to build a 1,600 km (1,000 mile) natural gas pipeline from Dampier, near fields off Australia's remote north-west coast, south to the port of Bunbury. The pipeline could support up to A$5 billion worth of industrial development and link up with the A$1.4 billion, Taiwan-backed steel plant scheduled to begin producing 2.4 million tonnes of steel slab annually in 2000, PGT Australia Pty Ltd's managing director Michael McDonald said. The PG&E-owned PGT has applied for a licence to build the pipeline to carry more than 500 terajoules (tj) of gas a day to Bunbury, for completion by 2000.But State Minister for Mines and Energy Colin Barnett opposed the plan as an effort to pre-empt energy policy. Construction of a pipeline that would rival the state-owned Dampier-Bunbury pipeline, now scheduled for privatisation, could reduce the price of the government's asset by A$200 million to A$400 million. Privatisation plans for the government line, held by state utility AlintaGas, are now with a steering committee. It is not known when the privatisation will occur or how much of the line will be sold, but the government wants to keep half ownership. Regardless, the PGT plan is seen as a major threat, with the A$1.2 billion AlintaGas pipeline carrying A$900 million in government-underwritten debt. Industry sources said there also were different views on how close PGT was to a deal with Kingstream Resources NL, the developer of Taiwan-backed steel plant. PGT was the most competitive bidder for supplying gas to Kingstream, which has called tenders for up to 170 tj of gas a day for the Geraldton plant, McKnight said. Kingstream's managing director Nik Zuks told that, "We have no commitment to the (PGT) pipeline". But he confirmed PGT had bid for the supply rights. Industrysources also said the government was angry because PGT planned to transport industrial-grade gas and let the state handle the more expensive household gas.
The state now has two main gas pipelines, the one owned by AlintaGas and a private, A$450-million pipeline built to supply Western Australia's inland goldfields.
(A$1 = $ 0.76)

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