Santos to close gas plant in WA amidst supply concerns
Santos will soon close its Devil Creek gas plant, which last year supplied 11 per cent of the WA market, as concerns grow about the volume and reliability of the state’s gas supply.
Significant problems have in the past seven weeks hit three major plants supplying gas to WA, leading to industry curtailing production and buying expensive diesel instead of gas to generate power.
In December, the annual official forecast of the WA gas market by the Australian Energy Market Operator predicted a tight gas market this decade and a significant shortage from 2030.
Santos declined to comment on the shutdown of Devil Creek that disclosures of expected capacity to AEMO show to be May 1.
The Adelaide-based company, which is the biggest supplier of gas to WA, foreshadowed in November that the Reindeer offshore field that supplies Devil Creek would run out of gas sometime in 2023 but did not say when it would occur.
Two years ago, Santos wrote $US98 million ($141 million) off the value of Reindeer as it expected gas production to drop sooner than expected.
The Devil Creek plant is currently operating at reduced capacity due to an unspecified problem. Santos plans to return it to full capacity on January 26, according to the AEMO gas bulletin board.
Santos’ larger Varanus Island gas plant has been operating at a fraction of its usual capacity since November, when gas leaked from a subsea pipeline. Full production is expected to rescue on January 27.
The summer gas shortage has been most severe for the past week when Chevron’s Wheatstone domestic gas plant was also out of action. Production has recommenced.
Pilbara fertiliser manufacturer Yara and alumina producer Alcoa have been forced to curtail production, and miner Rio Tinto and Alcoa have both needed to burn large quantities of expensive diesel to generate power.
Richard Harris, spokesman for the DomGas Alliance of major WA gas consumers, said the group had been predicting a near-term gas shortage for some time and called on the government to enforce obligations it imposed on gas exporters to supply 15 per cent of their gas to WA.
Harris said the liquified natural gas projects were only supplying the local market at a rate of about 10 per cent.
“We also need those Perth Basin projects to come on as soon as possible, and for no more domestic gas projects to be allowed to export,” he said.
“The policy says they will only be granted export permits under exceptional circumstances, such as a large domestic gas surplus, and the current domestic gas shortage does not fit that criteria.”
Harris said the gas was needed for feedstock for chemical production, mineral processing and power generation to firm up renewable energy.
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Source: Thanks smh.com