NSW Government approves gas terminal at Port Kembla

Port Kembla Gas Terminal

The NSW Government has awarded a Development Consent for the Port Kembla Gas Terminal (PKGT), bringing the project closer to finalising supply and investment.

The $250 million project involves Australian Industrial Energy (AIE) constructing a new berth at Port Kembla to accommodate Liquefied Natural Gas (LNG) carriers, a floating LNG handling facility, wharf infrastructure, and a pipeline to connect to the existing NSW east coast gas network nearby.

The AIE Joint Venture Partners consist of Squadron Energy, global energy infrastructure investor Marubeni Corporation, and the world’s largest buyer of LNG, JERA.

The PKGT project could supply more than 70 per cent of NSW gas needs, with first gas scheduled to be delivered to NSW industry by late 2020.

The NSW Government’s decision comes after a thorough review of the project’s Environmental Impact Statement (EIS).

The consent will pave the way to finalise supply contract negotiations with industrial customers. AIE expects a Final Investment Decision by mid-2019.

Having now received planning consent, AIE’s PKGT project is the most advanced of various proposed LNG import terminal projects on the Australian east coast.

The project has already entered into an agreement with Hoegh LNG to supply the Floating Storage and Regasification Unit (FSRU), a critical component of the PKGT.

Scheduled plans

The NSW Government’s approval includes conditions to:

  • Manage impacts during the construction of the import terminal, including excavation and dredging activities in Port Kembla harbour and management of contaminated materials and acid sulphate soils
  • Manage hazards and risks associated with the operation of the LNG import facility and gas pipeline
  • Regulate and monitor air and water discharges from the project during construction and operations

The Port Kembla location was chosen after a comprehensive evaluation process by AIE that assessed the long-term industrial nature of the site, port operations, berth configuration, proximity to existing east coast gas transmission infrastructure and AIE’s expected key customer base, as well as strong support from the local community.

AIE will use specialised ships as a “virtual pipeline” to transport LNG from a range of sources including domestic Western Australian and global suppliers.

Shipping gas this way significantly reduces the transport component of final prices to gas consumers, enabling AIE to deliver a competitive product.

This built-in supply cost advantage, along with the AIE consortium’s global purchasing power through JERA, will help AIE’s Port Kembla gas terminal revolutionise the Australian east coast energy landscape.

Securing energy for the state

In June 2018, the NSW Government declared the PKGT proposal Critical State Significant Infrastructure (CSSI) because of its importance to NSW’s future security and reliability of gas supply.

The Department of Planning and Environment (DPE) assessed the proposal, taking into account environmental, social and economic impacts, all community and stakeholder submissions received during exhibition, and advice from Government and independent experts.

The terminal is set to make NSW more self-sufficient when it comes to energy, and will create greater access to the global gas market.

NSW Minister for Energy and Environment, Matt Kean, said the Port Kembla Gas Terminal would be a game-changer for improving energy security and helping ease energy costs.

“The approval for the Port Kembla gas terminal is great news for more than 33,000 NSW businesses and a million households that already depend on natural gas,” Mr Kean said.

“It could support gas-fired electricity generation in NSW and help make sure we have reliable electricity even when the sun isn’t shining and the wind isn’t blowing.”

PKGT to yield major economic benefits

The project is also expected to create up to 150 local jobs in the construction phase and 40-50 permanent roles once the terminal is operating. It will also underpin approximately 15,000 jobs within the Illawarra region which are dependent on affordable gas supplies.

NSW Deputy Premier, John Barilaro, said this gas terminal will not only be a major boost for the local economy in Port Kembla and surrounds, but will also help to drive down the cost of living across NSW.

“Cost of living is a huge burden on households across this state, and today’s announcement is another step towards easing that burden by potentially lowering household gas bills in the future,” he said.

NSW Minister for Planning, Rob Stokes, said NSW currently relies on interstate sources for 95 per cent of its gas supply and this important project will help achieve energy security into the future.

“The project will enhance gas supply capacity – relieving gas price pressure for families and businesses across the state,” Mr Stokes said.

PKGT may fuel future gas turbine power station

The NSW Government’s development consent for the PKGT comes just a few weeks after the Federal Government announced AIE’s associated proposal to construct an 800MW gas-fired electricity power station in the Illawarra had been shortlisted as one of twelve possible projects being considered for the Underwriting New Generation Investments program.

AIE’s proposed Combined Cycle Gas Turbine power station would be fuelled by natural gas from the Port Kembla Gas Terminal, meaning the Terminal would not only deliver a major new source of gas for NSW, but potentially play a significant role in generating lower-cost firming electricity for the state.

“When you factor in the role the terminal could play in combination with a proposed new gas-fired power station, you realise AIE’s proposed Port Kembla Gas Terminal has the potential to revolutionise NSW’s future energy landscape for the better,” Mr Johnston said.

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