Q: Why import Liquid Natural Gas when Australia has huge reserves of its own?
At first glance, it would seem to make no sense to import gas from overseas when Australia is exporting large amounts of gas to overseas consumers. But this gas export trade together with other pressures which were unanticipated by the market, has impacted on available supply to and prices for our domestic gas market, and we need to look for other options.
As background, in the mid-2000s, Australian gas producers signed contracts to export gas overseas to meet growing demand in Asia. At that time, prices overseas were much higher than they could charge in Australia. When these contracts to export gas were signed, it was expected that the supply of gas at home would continue to grow at a rate that would allow for both the domestic and overseas market needs to be met. Unfortunately, this hasn’t been the case.
Prices in Australia today are often in excess of the price customers in Asia pay, and this pressure will continue unless action is taken.
AGL does not produce gas for export overseas so is impacted by the current challenges in sourcing affordable gas to meet the needs of residential and business customers.
If AGL imports gas from interstate and overseas it will help Australian gas users by:
Q: Will the Federal Government’s gas export controls remove the gas supply problem?
The Government mechanism has been designed as an emergency measure to supply gas to the east coast of Australia during periods of gas shortages. It does not assist the long term contracting of gas that is fundamental to supplying customers with gas contracts.
Q: AGL has advised it is closing its coal fired power stations. Is this LNG project just swapping gas for coal to generate electricity?
As the cost of renewable energy from sources like wind and solar continues to decline, it becomes the cheapest source of energy even without subsidies. To compliment renewable energy and ensure a reliable electricity system, flexible plant such as fast start gas turbines, hydroelectric dams or batteries are required.
Today it is cheaper to replace an old coal plant with a combination of renewables and gas peaking capacity, even with the current high gas prices. Importing gas will reduce the cost of generating this complimentary firming capacity.
Q: How much would the project reduce gas prices?
The cost of gas delivered through this project will be dependent on the international price of gas. Our vision is that the east coast of Australia should never again face the situation where Australian manufacturing businesses are paying significantly more for Australian gas than their overseas competitors, as is happening currently.
Q: Does the project carry risks?
Like all big industrial and resources projects the gas import jetty will carry some risks. The key is to identify, minimise and manage the risks to the greatest extent possible.
At AGL we believe it’s essential we are upfront about risks, especially with a project’s neighbours.
There are economic and commercial risks. If the supply or price of gas here or overseas changes to a great degree, the project might become unviable.
Any environmental risks are being identified and will be carefully managed.
AGL will prepare for and manage risks to water and air quality and minimise risks to flora and fauna as well as noise associated with the ship and the onshore equipment. As LNG ships typically use gas in their engines, unlike most ships that burn heavy oil in their engines, there is a lower risk of spills.
Safety risks will also require careful management. LNG contains large amounts of energy and under specific (and very unlikely) conditions has the potential to explode and burn.
Fortunately, very few incidents have occurred at LNG import terminals and there are currently hundreds of LNG ships safely operating, so these risks are well understood and can be managed. The LNG ships that will transport the gas incorporate advanced safety measures.
AGL always puts safety first. We will apply world’s best safety practices for operation of the gas import jetty and use independent experts to verify the design.
Q: How was the proposed route for the pipeline selected?
Developing a potential pipeline involves a number of steps and assessment criteria before a final decision can be made on the route. For the Crib Point to Packenham pipeline (CPP) there were several route options that were initially assessed. The process of selecting the route involves an initial desktop review using geospatial data (e.g. satellite imagery, GPS) which is then supported by on-the-ground observation (from outside private property) to develop a preferred profile to assess.
Each route option is assessed against the following criteria to determine the optimal route:
Following this process, a preferred route is selected and submitted to the Department of Land Water and Planning, along with a consultation plan for engagement with potentially affected land owners for approval. Once approval is received, then and only then can the pipeline developers consult with property owners to gain access to the proposed route to undertake the detailed survey work required to finalise the pipeline route.
The current proposed route was selected as it minimised the impacts on exsisting and future land use by maximising use of existing easements and avoiding heavily congested road reserves, rail yards and future residential development east of Pakenham. Although not the shortest overall route to the network entry point in Pakenham, it has the least impact on orchards, vineyards and hobby farms and avoids the Trust for Nature property – Ted Harris walk.
Q: Will land be compulsory acquired for the pipeline?
AGL will not build the pipeline itself, instead it will engage a pipeline developer to do this work. Part of our pipeline partner’s work will be minimise impact and to engage with any affected landholders to secure any required access. In some circumstances a pipeline developer may be given the right to compulsorily acquire and or access to land.
Q: Will the pipeline impact the RAMSAR wetlands?
One of the reasons for selecting the Crib Point jetty as the preferred site is because it has an existing working port and jetty and pipeline easements. This means we don’t need to build new marine facilities or prepare any shore crossings. We are aware of the RAMSAR wetland area in and around Crib Point. There may also be other environmentally sensitive areas along the pipeline corridor. AGL will work with the community and the relevant government authorities to avoid or mitigate any adverse impact in these areas. This may include engineering solutions such as drilling the pipeline path rather than digging a trench. Where trenching is used, the land will be remediated so there are no ongoing impacts to landowners.
Q: What studies is AGL undertaking as part of the feasibility study?
We have a group of specialists assessing the impacts of the works that are to be undertaken at the port as part of the AGL Gas Import Jetty Project. This includes cultural heritage, ecology, noise, air quality, hydrology, traffic, visual impact and marine science. Once we understand the impacts, we can then develop mitigation strategies, engineering solutions or alternative solutions to address these impacts.
Our marine scientists are currently investigating, studying and reviewing information in line with regulatory requirements and questions raised by local communities and interest groups.
It is likely that the FSRU will use sea water to warm the chilled LNG in a heat exchange unit and return LNG to a gaseous state, with water being returned to the ocean cooler than the ambient water temperature. The area alongside to the FSRU where the cold water is returned to the ocean water is called the mixing zone. This zone is being studied to determine what impacts this will have on marine life and the environment and what level of water and temperature is acceptable without creating harm to wildlife. Studies are being undertaken to determine at what point this cold water will have mixed sufficiently with the sea water and will return to the temperature of the surrounding sea water.
Q: Will there be an environmental effect study (EES) produced for the FSRU?
AGL has engaged independent specialists to prepare studies to support a referral under the Environment Effects Act 1978. The Victorian Minister for Planning will then make an assessment to determine whether an Environment Effects Statement (EES) is required.
The following studies have been prepared by specialists to support the EES referral.
Q: Who will be responsible for regulating the safety of the Gas Import Jetty Project?
As the gas import jetty project involves shipping, operational plant and a small section of pipeline, there are a range of regulatory bodies who will provide safety oversight to the project, including:
The following diagram shows the relationship between these agencies and the various elements of the project.
The Crib Point to Pakenham transmission pipeline, to be operated by a pipeline operator rather than AGL and which is not part of the project, is included in the diagram for information purposes only.
Q: Will the import jetty affect access to the foreshore for pedestrians or areas around the jetty for recreational users?
The exclusion zone required for the gas import jetty project will affect access to the foreshore. The Crib Point jetty currently has an exclusion zone around it for operations of the United Energy berth (Berth 1). The permanent mooring of the FSRU at the jetty would see a more rigid enforcement of exclusion zones than currently exists although the final make-up of the exclusion zone has not been determined. As the FSRU would be moored more than 500m off the shoreline it is not anticipated that existing access to Wooley’s Beach Reserve would be impacted. To the north of the jetty an area approximately 90 metres wide will be fenced along the foreshore to accommodate the metering station compound. This would impact current access to the beach immediately adjacent to the jetty (which is currently included in the port exclusion zone). We anticipate that access to the remainder of the beach (including the beach we understand is locally referred to as ‘shelly beach’ would still be available via the submarine viewing access track off the Esplanade.
Q: How does an FSRU work?
An FSRU is a Liquefied Natural Gas (LNG) storage ship that has an onboard regassification plant capable of returning the super-chilled LNG back into a gaseous state and then supplying it directly into the gas network via a pipeline. The FSRU Fact sheet provides a detailed description of an FSRU and its operation.
Q: Where else do FSRUs operate?
There are approximately 22 FSRUs in operation internationally with their use spread across Asia, the Middle East, the South Americas and Africa. The closest FSRU operations to Australia are two FSRUs located in Indonesia.
Q: Will ballast water be discharged into Western Port Bay?
The LNG Jetty at Crib Point is for unloading only and there are no plans to export LNG. Ships will arrive full of LNG and will not need to discharge ballast water. Rather, they will take on ballast water in Westernport as they unload their cargo.
We are aware that all ships, even with full cargo, may have remnants of Ballast water on board as the bottom ballast tanks have an un-pumpable ballast spread across all the ballast tanks that can’t be pumped.
To manage this, ballast water is exchanged at sea (at least 200 miles offshore and in greater than 200m water depth) to ensure any aquatic organisms have been pumped out and tanks are backfilled with clean ballast – it is this clean “deep ocean” water that would remain in the tanks from discharge at the time of LNG loading.
As operations at Crib Point are not expected to commence until 2020 or 2021, we expect that the FSRU will have been fitted with a suitable ballast water treatment system in compliance with the International Maritime Organization Ballast Water Management Convention, which came into force on 8th September 2017
At Crib Point, the FSRU will take ballast from Westernport and return ballast to Westernport as necessary to control the stresses on the ship’s hull. However, as it is always in a “harbour condition” it will not be exposed to seagoing stresses so will not need to take full ballast so the amount pumped in and out is reduced.
Q: How many jobs will be created by the project?
AGL anticipates that the project will directly create approximately 40 new jobs on an ongoing basis once the project is operational. These roles will relate to the running of the ship and also, regasification process undertaken on the ship as well as security and other support roles. It is our preference to prioritise local employment if there are suitable candidates.
There will also be a number of jobs created during the construction phase. The majority of the construction workforce will be specialists that will be sourced from a range of locations across VIC and interstate.
Opportunities for local suppliers and employment will include a range of general trade and support services such as:
AGL will require our partners and contractors to prioritise local sourcing of the above where suitable commercially competitive suppliers exist.
Where available, local suppliers will also be prioritised for general bulk construction materials (i.e. fencing materials, water tanks, geofabric, etc.).
Q: What will AGL do to give back to the community?
AGL always tries to support the communities in which we work. One of the ways we like to support our communities is with an energy-focused benefit – this might be a solar and battery system for a local community building or project, for example. The second thing we will do is to set up a community fund. The value of the fund and distribution model to be used to manage the fund has not yet been determined but will be determined in collaboration with the local community. There are a number for models used within AGL for Community Funds where the focus is upon a Community Representative Group making decisions on how the funding is shared.
Q: Will there be noise from the FSRU?
Like all industrial projects the gas import jetty will create noise and it is important we understand what the impact of that noise may be on the local community. As part of the feasibility study AGL undertook a noise assessment of the operational noise of the FSRU and the associated on-shore facility to assess compliance with EPA’s Noise Control Guidelines.
Noise sources for the project include the regassification processes and running noise of the FSRU, visiting LNG tankers, tug boats and the on-shore plant. United Energy operations at Berth 1 also produce noise and this has been included in noise assessments.
The operation of the FSRU is expected to be quite variable depending on gas demand, for example during high gas periods there may be periods where it is operating 24 hours a day, seven days a week, at times of lower demand it many only run 12 hours a day Monday to Friday or the FSRU may act as a storage facility and not re-gasify for extended periods.
Likewise, the amount of LNG tankers arriving each year would vary between 12 and 40 ships.
Noise modelling was undertaken for residences in Crib Point and French Island. The assessment shows that operation of the FSRU is compliant with EPA recommended noise levels for all operating scenarios during day time hours, including when United Energy is also operating.
During evening and night time operations, noise from tug assisted arrivals of LNG tankers when United Energy is also operating is predicted to exceed the recommended noise levels for evening and night time periods. AGL is looking at mitigation strategies to avoid this, including coordinating operations with United Energy to reduce noise should docking of LNG tankers need to occur at night.
The full assessment can be read here.
Read the Noise Assessment fact sheet
Q: Does the FSRU produce pollution?
NG is a fossil fuel, as such the operation of the FSRU produces air emissions. To understand what these air emissions may be an Air Quality Impact Assessment report has been completed for FSRU operations.
The assessment was undertaken in accordance with Victoria’s State Environment Protection Policy (Air Quality Management) and the Environment Protection Authority (EPA) Victoria guidelines for use of the regulatory model ‘AERMOD’. Senior EPA air quality specialists were consulted about the data and methodology used to complete the assessment.
The report assessed two possible fuel types for FSRU operation gas fueled and liquid fueled. It should be noted that the FSRU will most likely use gas fuel (boil off of the LNG cargo) for combustion in the power plant engines. Liquid fuel (marine gas oil – MGO) would be used in back-up circumstances and is included in the modelling for completeness.
The AERMOD results for the gas-fuelled and liquid (diesel)-fuelled FSRU scenarios demonstrated there were no exceedances of State Environment Protection Policy (Air Quality Management) (SEPP(AQM)) Design Criteria at any of the discrete receptors, for any of the pollutants.
The nearest off-site sensitive receiver (resident) to the main FSRU gas processing area at Berth 2 is located approximately 1.5 kilometres from the project.
The AERMOD modelling assessment of the FSRU scenarios demonstrated there were no exceedances of SEPP(AQM) Design Criteria for nearly all grid points over land, with most exceedances occurring around the FSRU, and off-shore. These results for ‘low risk’ exceedances, primarily off-shore, were obtained for the pollutants: NO2 (for which conservative measures were taken in the assessment), SO2, PM10, and PM2.5.
There were no exceedances for any of the grid receptors for any of the higher risk Volatile Organic Compounds (VOCs) tested by modelling; benzene, formaldehyde, and PAHs (Polycyclic aromatic hydrocarbons).
The general conclusion of the air quality modelling assessment is there is a low risk of air quality impact from the project’s FSRU and LNG carrier operations for on-shore sensitive receptors near Crib Point.
The full assessment can be read here.
Read the Air Quality Assessment fact sheet
Q: How much Greenhouse gas does the FSRU produce?
As methane (the gas state of LNG) is a fossil fuel the facility will produce greenhouse gas emissions.
A Greenhouse Gas Emission Assessment was undertaken on FSRU operations to assess whether operation of the FSRU produces less greenhouse gas (GHG) than the 200,000 t CO2-e per annum trigger for a referral under the Environment Effects Act 1978.
As such the report looks at the highest possible levels of greenhouse gas (GHG) emission should the FRSU operate with 52 LNG tankers per year and a calculation for the theoretical maximum the ship could operate at if there was no down time (78 LNG tankers).
The actual regasification operation of the vessel is expected to be quite variable depending on gas demand, for example during high gas demand there may be periods where it is operating 24 hours a day, seven days a week, at times of lower demand it many only run 12 hours a day Monday to Friday or the FSRU may act as a storage facility and not re-gasify for extended periods.
Likewise, the amount of LNG tankers arriving each year would vary between 12 and 40 ships. Hence the actual greenhouse gas emission are expected to be far lower than the scenarios assessed for this report.
The key GHG emissions for the FSRU facility are related to the consumption of natural gas by four reciprocating engines and gas fired boilers on board the FSRU. These engines will provide all power for the facility, i.e. general utility power, as well as for gas processing equipment to enable the vaporization and pressurization of the gas before it is delivered to the gas transmission pipeline.
The assessment found that under all model scenarios greenhouse gases a are below 200,000 t CO2-e. I
Read the Greenhouse gas fact sheet
Q: Why are works commencing at the jetty prior to AGL making a decision on proceeding with the projects?
Should the project go ahead the remediation work at berth 2 on the Crib Point Jetty would need to be ready for gas import works to commence in the summer of 2018/19. That is why works are commencing in early 2018. The repair works will remediate berth two at the Crib Point Jetty making it available for use by the Port Authority regardless of whether the Gas Import Jetty Project proceeds.
Q: How safe is the gas transmission pipeline?
To ensure the safety of landowners and communities, all gas transmission pipelines in Australia are designed, constructed, tested, operated and maintained in strict accordance with Australian Standard AS2885 – Pipelines – Gas and Liquid Petroleum. This standard puts public safety at the forefront of decision-making, and ensures the safety of the community, protection of the environment and security of gas supply to users.
The Standard requires pipeline operators to undertake extensive investigations to identify, document and control any threats to pipeline along their entire length. Every pipeline is designed to take account of the known and proposed land uses and the likely risks in the range of environments through which they pass.
In a global context the Australian pipeline industry’s safety record is impeccable. There have been no recorded injuries or fatalities associated with pipeline damage in Australia, and incident rates are an order of magnitude lower than overseas.
Got a question or want to have your say? We’re keen to hear from you.