Gas Week

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Oil accounts for only 0.02pc of primary energy use in NEM generation in 2005/06, says NEMMCO report

Posted by gasweek on 19 September, 2007

Oil accounted for only 0.02 per cent of primary energy used in generation in the NEM in 2005/06, according to ‘Fuel resource, new entry and generation costs in the NEM’, a report by ACIL Tasman to NEMMCO (27/3/2007).

Oil and gas capacity: Most of the open cycle turbines peaking stations in the NEM could be operated on either oil or gas, including Jeeralang, Somerton and Valley Power in Victoria, Oakey in Queensland and Snuggery in South Australia. Oil was also used in Newport when prices were higher and gas was not available and in TIPS to fire the station for short high-peak periods when the Moomba to Adelaide pipeline (MAP) lacked capacity to supply further gas.

Rebate doesn’t apply: Oil was used in coal fired generators for start-up but this was a relatively minor amount. The use of oil in generation did not qualify for rebate of the fuel excise. This meant that a station using middle distillate would be facing a fuel cost of over $25.00/GJ if the price was $1.00/L. Of course this cost would depend on the prevailing world oil price and the generator’s ability to achieve a lower bulk price. In calculating the short run marginal cost for dual-fuel stations the gas price has been adopted.

Peaking stations: For peaking stations that could only use petroleum products, such as Port Lincoln and Snuggery in SA, Townsville GT, Mt Stuart and Mackay in Queensland and Hunter Valley in NSW, it has been assumed that petroleum product price was $25.00/GJ. Oil consumption by these stations in recent years has been generally less than 0.5PJ apart from 2001/02 when Mt Stuart and Townsville were regularly used for system support in north Queensland.

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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