As the federal government implements its Future Gas Strategy and new gas resources come online, Australia’s pipeline industry, led by APA Group, is advancing infrastructure expansions to meet expected east coast demand, while the regulator implements a new transparency and monitoring initiative.
APA Group – Australia’s largest natural gas infrastructure provider – released a five-year expansion plan for the East Coast Gas Grid in February, which lays out how APA will increase its north-to-south transport capacity by about 24 per cent, and also boost its southern markets storage.
The broad aim of the plan is to help ensure lower cost and lower emissions gas is available to meet expected future demand from the eastern states, with its initial funding part of APA’s $1.8-billion development pipeline. Michael Symes, Principal Consultant at strategic advisory firm ACIL Allen, said the east coast gas market was in a delicate situation, with balancing supply and demand a challenge for the industry.
He noted that despite the increased capacity of APA’s grid expected to help meet demand over the next few years, ACIL Allen’s demand projections still indicated that even with the increased pipeline capacity and other investments, the east coast would likely need LNG imports to meet future demand.
Symes added: “Even with investments in upstream supply and infrastructure by companies like APA and others, the long-term outlook for needing LNG imports doesn’t change – the market has a long way to go before available supplies can consistently meet long-term demand expectations.”
An initial investment of $75 million was committed for the expansion plan, with an immediate spend of $40 million to deliver two final investment decision-ready enhancements to the east coast grid that will add new north-south capacity in 2025 and 2026.
These enhancements are the Moomba to Sydney ethane pipeline (MSEP) conversion project, which will increase total southbound capacity from Moomba to Sydney; and the MSEP off-peak capacity expansion project, which will deliver two pressure regulation skids to increase capacity in summer when pipeline maintenance is being undertaken.
The remaining $35 million will fund early works for the expansion plan’s third, fourth, and fifth stages, supporting storage projects developed over the medium term. Adam Watson, APA Group Managing Director and Chief Executive Officer, described the projects in the pipeline as critical to the national interest, as they helped secure Australia’s energy future and supported a more affordable and lower emissions energy system.
He said: “Australia will need gas out to 2050 and beyond as a critical backup to renewables and to support many of Australia’s key manufacturing and industrial sectors. “These investments will help the Australian economy avoid the disastrous option of importing higher-cost, higher-emissions LNG, which will undermine domestic energy security and expose Australia’s energy market to global supply chains and prices.
“In contrast, APA’s investment will further support the development and commercialisation of Australia’s domestic gas industry, delivering critical security of supply and economic and employment benefits.” In his keynote address to this year’s Australian Domestic Gas Outlook conference, Watson highlighted the advances made by the industry to support government policy and facilitate the energy transition.
He pointed to Australia’s Future Gas Strategy, AEMO’s Gas Statement of Opportunities (GSOO), and the right regulatory settings to support nimble investment in energy infrastructure. The GSOO provides AEMO’s forecast of annual gas consumption and maximum gas demand, and reports on the adequacy of central and eastern gas markets to supply forecast demand over a 20-year outlook period.
Watson noted that demand for gas in Australia was expected to be strong up to and beyond 2050, as confirmed by “experts including AEMO and the Centre for Applied Energy Economics and Policy Research at Griffith University.
He added: “Second to industry demand is gas peaking power generation, which is forecast to play a critical role as we replace coal with renewables. “We’re seeing forecasts for new gas peaking generation of 13 and 20 gigawatts being required over the next decade, which will command significant ongoing infrastructure investment.”
He also detailed how APA had laid out a clear plan to ensure that the required transport infrastructure over the coming years was available to support the Beetaloo, and by extension support a new domestic gas supply for the east coast.
The first stage of APA’s investment in the Beetaloo is underway and will connect the basin with the NT gas market. APA has inked partnership agreements with upstream producers in the region who are drilling to bring large volumes of gas to market.
Stage three centres around building capacity to move more gas between northern basins (such as Surat in Queensland and the Beetaloo in the Northern Territory) and southern markets. This includes the proposed delivery of the Bulloo Interlink, a new 380-kilometre, 28-inch pipeline which will connect the South West Queensland Pipeline (SWQP) to the MSEP.
The fourth stage involves delivery of the proposed new Riverina Storage Pipeline (RSP) in NSW, along with new compression and pipeline infrastructure, to provide increased southern market storage that meets AEMO’s forecast need for peaking gas-powered generation as more variable renewables come online.”
“If progressed, stage four will add new storage capacity in the winters of 2028 and 2029, and could be delivered in stages.Stage five will add a level of flexibility to the grid and amplify the investments made in stages three and four, with proposed capacity upgrades to the Victorian Transmission System (VTS) that will expand the MSEP and VTS to 350 terajoules a day from Young in NSW to Wollert in Victoria.T
he estimated 84 per cent increase in transport capacity into Wollert will be achieved with new compressors, reconfiguration works, and new metering and pressure regulation infrastructure, and can be delivered as early as winter 2029.
To ensure ongoing regulatory stability as APA institutes its expansion plan, the Australian Energy Regulator (AER) in March released its first Gas pipeline Monitoring and Transparency report, the direct result of AER obtaining new monitoring and reporting powers in 2023, aimed to address concerns of under-regulation and the potential market power of gas pipeline service providers.
The new report outlined the limited transparency in the prices and non-price terms and conditions set by service providers, limiting the assistance the information provides pipeline users in negotiations with service providers for access to pipeline services.
The AER also found that pipeline users reported different experiences and bargaining power to negotiate terms and conditions for pipeline services.
This was supported by AER’s analysis, which indicated that some users may have limited ability to negotiate across pipelines.”
