PERTH (miningweekly.com) – Andrew Forrest’s Squadron Energy has taken another step in the development of the Port Kembla gas terminal (PKGT) after inking a 25-year lease with New South Wales Port.
Australian Industrial Energy (AIE), which is part of Squadron Energy, will immediately start a site handover process, paving the way for the new gas terminal construction works to commence.
Construction of the PKGT is forecast to take only 18 to 20 months, putting the project on track to supply more than 75% of New South Wales' gas needs by the end of 2022.
The lease agreement includes a ten-year initial term with options to extend up to a maximum 25-year term, and cements the PKGT as the only project in the eastern states with a potential timeframe to assist the New South Wales state government to meet the terms of its recent memorandum of understanding with the Commonwealth to inject an additional 70 PJ of gas into the east coast market to meet predicted shortfalls.
Squadron Energy CEO Stuart Johnston said the agreement with New South Wales Ports further clears the way for agreements between AIE and future gas supply customers to be completed in the coming months.
“We have long recognised Port Kembla as the best site for this critical gas project and with the lease for the terminal now agreed, commercial arrangements around future supply contracts can be accelerated with confidence,” Johnston said.
AIE chairperson Michael Masterman said the PKGT demonstrated the important role of natural gas as a transition fuel toward a low carbon future.
“Our commitment to delivering Australia’s first gas terminal is about reinforcing grid reliability today and investing in carbon-free technologies that support a more rapid decarbonisation of the economy.”
The PKGT is strategically located in an existing industrial port with experience in hydrocarbons. The terminal will be located 6 km from the existing Eastern Gas Pipeline, which provides a major natural gas arterial between Victoria and New South Wales.
At a forecast capital cost of A$250-million, the project will create some 130 to 150 jobs during construction, and between 40 to 50 ongoing roles during operations.
Meanwhile, AIE is also accelerating the associated development of a dual fuel, liquefied natural gas and hydrogen, 800 MW power station in the Illawarra to be initially fuelled by gas from the PKGT.
The design provides for large-scale dispatchable power and the ability to transition to hydrogen fuel as Fortescue Metals Group and other hydrogen suppliers bring industry-scale production online.