Squadron says Port Kembla LNG import terminal could meet gas shortages

Andrew Forrest’s Squadron Energy says gas customers could be shielded from future shortages on the Australian east coast by bringing gas directly into New South Wales through its Port Kembla FSRU-based LNG import terminal.

Australian Industrial Energy (AIE), a unit of Squadron, signed in November a long-term FSRU charter deal with floating player Hoegh LNG for its Port Kembla Energy Terminal (PKET).

The Port Kembla terminal will have the capacity to deliver over 100 petajoules of natural gas each year. This represents about 75 percent of NSW total market needs, according to AIE.

Squadron said in a statement on Tuesday the terminal’s wharf infrastructure is 80 percent complete. It expects the terminal to become operational at the end of 2023.

The firm released a statement in a response to a report by the Australian Competition and Consumer Commission (ACCC) saying that LNG exporters must divert gas to the domestic market to avoid shortfalls.

ACCC predicts significant gas shortfalls in 2023 and beyond as well as rising energy prices.

Squadron CEO Eva Hanly said in the statement small and medium business customers who purchase gas on the spot market “are increasingly worried about a gas shortage which could mean gas prices skyrocket – putting pressure on their ability to operate.”

Moreover, Hanly said that “it is extremely concerning that the ACCC’s outlook for the east coast gas market has significantly worsened.”

The company is working to finish the terminal “as quickly as possible” to supply gas to commercial and industrial users, gas-powered generators, and retailers.

Importing LNG from Queensland

Hanly said the Port Kembla terminal “is the only solution that can supply gas directly into the East Coast gas network – the other proposals such as developing new gas fields at Narrabri or building new pipelines from Queensland will not be able to deliver gas for years.”

The ACCC forecasts the east coast of Australia could face a shortfall of 56 petajoules in 2023.

While the ACCC is strongly encouraging LNG exporters to immediately increase their supply into the market, the challenge is physically getting the gas from Queensland into NSW and Victoria, the statement said.

Also, the congestion within the gas pipelines means that there is not a lot of opportunity to bring more gas down from Queensland.

“The great thing about this terminal is that it has the potential to ship gas from Queensland directly into NSW, bypassing the congested pipeline infrastructure,” Hanly said.

Curtis Island off Gladstone, Queensland is home to the three LNG export facilities, the only such facilities on Australia’s east coast.

This include the Santos-operated GLNG plant, the ConocoPhillips-led APLNG terminal, as well as Shell’s QCLNG facility.

Hydrogen plans

Besides LNG imports, Squadron has also hydrogen plans for the Port Kembla facility.

The pipeline connecting the terminal with the East Coast Gas network would become the first green hydrogen enabled pipeline under construction in Australia, according to Hanly.

However, in the short-term, “we hope our terminal can relieve this gas crisis,” she said.

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