Gas Week

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NEM zone with lowest gas cost is northern NSW at $2.38/GJ; only other zone below $3.00/GJ is southwest Qld, says NEMMCO report

Posted by gasweek on 18 September, 2007

The delivered gas prices projected to be available for gas-fired base/intermediate load plant in each of the 17 NEM zones were detailed in ‘Fuel resource, new entry and generation costs in the NEM’, a report to NEMMCO by ACIL Tasman (27/3/2007).

Prices for 20yr period: These prices represented the delivered costs of gas to each zone and included both the commodity price and any applicable transmission charges to the nominated reference point within that zone. Prices were shown for the 20 year period 2007-08 through to 2026-27. Gas prices for peaking plant could be taken as 1.25 times the prices shown in Table 53 of the report – based on the factors considered in section 7.3. Figure 9 showed the delivered costs for each zone ranked in terms of price for the year 2011-12 in nominal dollars per GJ.

Lowest-price zone: The zone identified as having the lowest gas cost was Northern NSW at $2.38/GJ. This represented an estimate of the price that CSG producers in the region may be willing to accept from on-site power generation as an option for gas commercialisation, given that in the absence of a pipeline connection to the rest of the Eastern Australian market the alternative commercialization pathways were limited.

CSG development: The major upstream player in the region, Metgasco, was currently developing CSG resources in the Casino/Lismore areas of the Clarence Moreton Basin. Metgasco’s current certified reserves position is 22PJ (2P) and 1,123PJ (3P) out of an estimated gas resource in place of around 4,800PJ. As the region currently only had access to local CSG resources, it would be well suited to baseload generation developments, but with limited capacity to provide swing services for peaking stations. The only other zone which featured sub-$3.00/GJ gas was South West Queensland which, again, was based on local access to CSG.

Snowy left out: Given the region’s significant reserves base and ongoing potential for development of projects, the region could support a number of generation developments. The only zone not projected to have suitable access to gas infrastructure to support generation was Snowy; however, if there were compelling reasons to locate a CGGT (combined cycle gas turbine) in this zone, a pipeline could be constructed from either the MSP or the Victorian network.

Reference: ‘Fuel resource, new entry and generation costs in the NEM’ Report 2 – Data and documentation. Draft Prepared for NEMMCO, ACIL Tasman – Economics Policy Strategy, 27 March 2007.

Erisk Net, 29/7/2007

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