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PORT KEMBLA GAS TERMINAL COMMUNITY NEWSLETTER

FAQS

THE PROJECT

What does Australian Industrial Energy’s Project involve?

AIE is proposing to construct a liquid natural gas (LNG) import facility at Port Kembla near Wollongong, NSW.

It will be a simple and relatively quick way to bring a new source of natural gas into the NSW market.

The facility will allow carriers transporting LNG to berth adjacent to a Floating Storage and Regasification Unit (FSRU). The LNG will then be transferred from the LNG carrier to the FSRU, where it will be converted from liquid to gas.

Once offloaded, the LNG carriers will sail back out of port.

The natural gas in the FSRU will then be piped from the FSRU to the nearby Eastern Gas Pipeline (a distance of no more than 13 kilometres), and on to customers.

Project Overview factsheet.

How much will the Project cost?

The import terminal facility is expected to cost between $200m – $300m.

HOW THE IMPORT TERMINAL WORKS

Click here to view a fact sheet on the import terminal

What will be the LNG import capacity of the facility?

AIE expects the Floating Storage and Regasification Unit (FSRU) to have the capacity to store and re-gasify up to 100PJ of gas per year. This equates to about 70% of NSW’s current gas demand. The number of cargoes imported will depend on market demand, but we anticipate an LNG cargo to be scheduled for arrival every two to three weeks.

How will the process work?

AIE will procure a Floating Storage and Regasification Unit (FSRU) which will be moored at Berth 101 on the eastern side of Port Kembla’s Inner Harbour. An FSRU is similar in concept to an LNG carrier that has onboard capability to convert LNG back into a gas. LNG carriers will arrive at the harbour, dock alongside the FSRU and unload their cargoes into the FSRU via cryogenic loading arms.
Once regasified aboard the FSRU, the gas will be sent via a short pipeline to the existing gas transmission network.

How does the transfer between the LNG carrier and the FSRU take place?

The LNG carrier will berth alongside the FSRU. The LNG will be transferred from the carrier to the FSRU via cryogenic loading arms or hoses, which are able to withstand the -161 degrees Celsius temperature of the LNG. The offloading process from the LNG carrier is expected to take around 24 hours.

How is the LNG converted to gas?
LNG is stored on both the LNG carrier and the FSRU in double-hulled tanks specially designed and constructed to prevent potential leakage or rupture. These tanks are insulated, as LNG needs to be kept at a temperature of -161 degrees Celsius to stay in a liquid state.

When it is time to convert the liquid back to gas, the LNG will be flowed through a series of pipes on board the FSRU. Seawater from the harbour will be circulated around the series of pipes to warm the cold LNG, resulting in a slow evaporation of the liquid back into gas ready to enter the existing gas transmission network.

The seawater used in the regasification process is then released back into the harbour. This water will be cooler than the ambient water temperature in the harbour. Studies will be carried out as part of the environmental impact statement (EIS) process to determine a suitable location for the discharged seawater and to ensure the cooler water is recirculated appropriately.

Will gas be stored onshore at the site?

The natural gas will not be stored on land at the Port. It will be contained in the FSRU and stored in a cooled, liquid form until it is required to be put into the gas network.  Natural gas in liquid form is not flammable or explosive.

FSRUs currently operate in numerous locations around the world and are designed and constructed to strict international standards in terms of safety and operations.

How does the gas get from the FSRU to the pipeline?

Once the LNG has been converted back to a gas and is ready to be sent to the pipeline, the gas will be transferred onshore from the FSRU via cryogenic loading arms or hoses located on the jetty. The gas will then be transferred via an underground pipeline to the Jemena Cringila Metering Station and then onto the Eastern Gas Pipeline (EGP) which runs from Victoria to Sydney.

How does the gas get from the FSRU to gas users? Is there a major pipeline at or near Port Kembla, or will this need to be built?

The Eastern Gas Pipeline (EPG) is an existing natural gas transmission pipeline which runs between the Gippsland Basin in Victoria through to Sydney. The EGP is 797 km long and supplies natural gas to regional markets in NSW, including Cooma, Canberra and Wollongong.

Port Kembla was chosen partly because of its proximity (approximately 13km) to the EGP. As a result, only a short pipeline will be needed to connect the FSRU to existing gas transmission networks.

This proposed pipeline will pass largely through existing industrial land and connect to the Jemena Cringila Metering Station and then onto the Eastern Gas Pipeline (EGP). Evaluation of the exact pipeline route options will form part of the EIS process.

Regardless of the final route, any pipeline will be designed and constructed to Australian standard AS2885, which is the standard applicable to the design, construction, testing, operations and maintenance of gas pipelines of this nature.

The use of a pipeline connection, means there will be no need to truck LNG from the port to industrial users.

What are the benefits of using an FSRU?

Using an FSRU eliminates the need to build regasification infrastructure onshore. In addition, at the end of the Project’s life, the FSRU can sail off to another location, so no excess infrastructure remains. As the vessel has both regasification and storage capacity, the amount of gas sent to the network can be regulated according to demand. The FSRU will be able to store enough gas to meet all of NSW gas needs for 10-12 days. This provides NSW with enhanced energy security, should there be a disruption to the state’s gas supply.

What is the size of the FSRU?

We are still in the process of procuring the most suitable FSRU for the Project. However, the FSRU is likely to have a capacity of around 170,000 cubic metres and be about 300 metres in length. Its deck would be around 30 metres from the water line, with its highest point, the bridge, about 50 metres above the water line. In context, the ER & S Smokestack at Port Kembla stands about 200m tall.

Does the FSRU require its own full time berth? Will this constrain other port users?

The FSRU is a sea-faring vessel and will be able to sail out to sea if required, however, to deliver reliable, constant gas to customers, the FSRU needs to have dedicated access to a berth. Berth 101 on the eastern side of the inner harbour will be the full-time location of the FSRU.

In selecting the site, extensive consultation has occurred with NSW Ports, the Port Authority and the Port Kembla Coal Terminal to ensure the activities of the Port Kembla Gas Terminal (PKGT) will not negatively impact other Port users or potential future uses. The PKGT may also add to future diversification of the Port, including for services like LNG bunkering (a re-fuelling station for ships powered by LNG).

How widespread is the use of FSRUs?

There are close to 30 FSRUs in operation around the world, including in the US, Italy, Lithuania, Argentina, Israel, Dubai and the United Arab Emirates. There are also several vessels under construction or planned.

LOCATION

Why was Port Kembla chosen as the location for the terminal?

A detailed engineering assessment was conducted on three potential port locations within NSW. Port Kembla was ultimately selected, given the specifics of the berth and inner harbour layout and the site’s proximity to existing gas transmission pipelines .

The facility will be a good fit with the surrounding infrastructure and industry and there was strong support for the Project from NSW Ports and the local business community.

What will the impact be on the Port?

We expect minimal impact to Port activities during construction and once the Project is operational.
Port Kembla is one of Australia’s major ports. It is NSW’s largest motor vehicle import hub and is the second largest coal export port in New South Wales.

AIE’s proposed facility will be located adjacent to the existing coal loading terminal, which has been in operation for many years. The facility itself has a relatively small footprint consisting mainly of a berth and associated offloading equipment where the FSRU will be moored and LNG carriers will unload their cargoes.

We will have some flexibility with regard to berthing timeframes, due to the manageable number of ship movements we anticipate (less than 20 shipments of LNG annually, compared to the more than 800 vessels that visit the Port each year). We will work closely with Port authorities at all times to manage any impacts on other users.

At the end of the Project life, the FSRU will simply be sailed out of the Port and relocated so there are minimal residual impacts.

What changes will there be to the existing berth?

Berth 101 will be reshaped to allow the FSRU to be located within the current wharf footprint. This will allow the FSRU and LNG carrier to dock side by side. The LNG carriers will also be angled in to minimise any interference with vessels entering or exiting from the inner harbour. We will need to undertake some dredging and excavation work to carry out these modifications.

Will the terminal impact opportunities for cruise ships to use the Port?

Currently there are two cruise ship arrivals in Port Kembla each year. We are anticipating about 20 LNG carrier arrivals annually as part of our Project. We don’t expect to impact the cruise trade and will undertake studies as part of our next phase of work to confirm this.

BENEFITS

What are the benefits of the Project?

The Project has the potential to supply more than 70% of NSW gas needs and provide between 10 to 12 days of natural gas storage in case of interstate supply disruption.

It will introduce a new source of competitively priced gas to meet predicted supply shortfalls and help put downward pressure on prices. By providing long term contracts to industrial gas users, the Project will help support the 300,000 jobs across NSW, and the 15,000 jobs in the Illawarra, which rely on an affordable supply of natural gas.

Project Benefits factsheet.

How will this Project benefit Port Kembla?

The key benefit to the region is the access to local gas. Gas is expensive to move via pipeline and so businesses located close to the source of supply enjoy a competitive advantage over businesses located further away from supplies.

It is estimated there are around 15,000 jobs in the Illawarra region that are associated with gas-reliant businesses. Access to competitive gas supplies provides some assistance in retaining those jobs in the region, as well as providing a potential incentive for new industrial clients to consider establishing operations in the region , which could lead to substantial new local investment and employment opportunities.

In addition, the presence of LNG import handling facilities paves the way for new potential value-add services to be established at Port Kembla, such as LNG Bunkering. This is the ability to re-fuel ships at sea. The use of LNG to fuel ships is more environmentally friendly than the use of diesel.

How many jobs will the Project create?

We estimate 130-150 jobs will be created during the construction phase and 40-50 ongoing roles will be generated by the Project.

I’m interested in working with AIE, or would like to know how my company can be considered for any future work?

The Project is currently in its early front end engineering and design (FEED) stage, We are working through our needs for the FEED process and anticipate our procurement/contract team will be actively engaging the market later this year – most likely around September/October.

If you would like to register interest please email us at [email protected]

COMMUNITY

Does the Project have local support?

 

We have presented information on our Project to local businesses and business groups, the Wollongong City Council and local Members of Parliament. These groups have recognised the opportunities the Project could present to the area and we are very appreciative of the support we’ve been shown to date.

 

Following our confirmation of Port Kembla as the site for the gas terminal, we have also had the opportunity to present to the Port Kembla Harbour Environment Group and Neighbourhood Forums 5 and 7. We look forward to meeting with other community groups over the coming months.

 

How can I find out more about the Project?

There are a number of factsheets on our website which will be updated as the Project progresses and any additional questions can be emailed via our website. Our community and stakeholder team is also available to present to interested business and community groups, please contact us via our website or phone 1800 810 680.

We will be producing regular newsletters to keep the local community and other stakeholders informed about our progress. Please contact us via the website if you are interested in having the newsletter emailed to you. View our July newsletter here.

 

NEED FOR THE PROJECT

If Australia is one of the largest exporters of natural gas in the world, why do we need to import gas?

NSW imports more than 95% of its natural gas from other states. A number of studies and reports have predicted shortfalls in the NSW gas supply from around 2022.

The gasfields that have traditionally supplied the NSW market, offshore Victoria and the Cooper Basin in South Australia, are in decline, so volumes are decreasing and the gas is more costly to extract. In addition, the gas being developed from coal seam gas projects in Queensland is expensive to extract and is also contracted to overseas buyers via long term, high priced agreements.

NSW needs to find a speedy solution to its predicted gas shortage. An LNG import terminal provides the most efficient and cost-effective solution for NSW to secure its own unlimited supply of natural gas.

How will this importation of gas provide benefits?

The Port Kembla Gas Terminal will be NSW’s first liquefied natural gas import terminal, with the capacity to supply over 70% of NSW’s gas needed. This will significantly improve NSW’s security when it comes to reliable supply of gas for NSW manufacturers, powerplants and households.

In addition, the supply of new competitively priced gas will help keep downward pressure on prices and help the competitiveness of NSW manufacturers, who currently pay high, additional overland pipeline transportation costs on every gigajoule of gas they consume from other States.

Where will the gas come from?

To ensure we procure the lowest priced gas, AIE will be seeking supply quotes from a range of both domestic and international suppliers. JERA, a partner in the Project, is the world’s largest buyer of LNG (accounting for nearly 15% of global LNG purchases). This will help AIE to access to gas at competitive prices.

How do shipping costs compare to pipeline costs?

The cost of shipping LNG by sea is significantly cheaper than using an overland pipeline. The ACCC Gas Enquiry 2017 – 2018 Interim Report noted in April 2018 that gas being transported from Queensland to Sydney could incur transmission tariffs of between $2 – 3.57 per gigajoule. Given the extensive distances to be covered between the producing gas fields and NSW demand, using a cheaper seaborne “virtual pipeline” is more economic.

NEXT STEPS AND TIMEFRAMES

How long will it take to get the Project up and running?

Subject to assessment timeframes, we expect to begin construction in 2019 and anticipate having the first gas to market in 2020.

What are the next steps to getting the Project approved?

The Project will undergo a stringent assessment process. We have submitted a detailed description of the Project to the NSW Government and recently received the Secretary’s Environmental Assessment Requirements (SEARs) for the Project. These SEARs detail the studies and assessments that need to be included in AIE’s Port Kembla Gas Terminal Environmental Impact Statement (EIS).

This includes assessments of environmental, noise, safety and social impacts, economics and stakeholder and community engagement. View the SEARs on the NSW Government’s Major Projects website.

We are now preparing the EIS and anticipate submitting it to the NSW Government later this year. The EIS will then be placed on public exhibition and public submissions can be made during this time.

AIE will then be required to respond to these public submissions and demonstrate it has considered and addressed any issues raised.

Once these steps are complete, the Government will consider the EIS and make its assessment decision.

How does the June 22 declaration of the Project as Critical State Significant Infrastructure impact the assessment process?

To be declared Critical State Significant Infrastructure (CSSI), a project must be deemed by the State Government to be essential for NSW’s economic, environmental or social benefit. While the CSSI designation is not a development consent, it does clearly set out the approval pathway the Project needs to follow and delivers the shortest possible planning approval timeframe.

It does not alter the robust assessment process (see steps in answer above), which will remain just as stringent as for other similar scale projects.

ABOUT LNG

What is LNG?

LNG is natural gas, mostly composed of methane, which has been cooled to -161 degrees Celsius so it becomes a liquid. In liquid form, the volume of gas becomes 1/600th of its original size which makes it much easier to transport.

In its liquid state, LNG, cannot explode or burn. It is colourless and odourless and if spilled it will quickly evaporate. As it vaporises completely, no residues remain.

Is it dangerous to transport by ship?

The LNG industry is well-established, having been in operation for almost 60 years, and has an enviable safety record.

The LNG is not stored under pressure and is not explosive or flammable in its liquid state making it very safe to transport.

RISKS

What are the risks and environmental issues associated with the Project?

As with any industrial project we will work with all relevant authorities to ensure the risk are minimised and managed to the greatest extent possible. As part of the assessment process for the Project, risks will need to be identified and mitigation plans detailed to the satisfaction of the relevant Government regulators.

A number of studies, including baseline studies, will be undertaken including environmental studies on aspects of the project like noise, air quality, hazard and risk and social impacts.

Emergency response plans for the terminal will also be developed in consultation with the Port Authority, other port users and neighbouring industrial sites

See our Operational Safeguards factsheet for more information

Transportation: The transportation of LNG by ship commenced almost 60 years ago and the industry is well established. Both the carriers and the FSRU are designed to strict international standards. They are purpose-built and have double hulled tanks to provide protection against accidental leaks or rupture. The vessels are equipped with automated leak detection mechanisms and Emergency Shut Down Systems.

LNG transfer: The FSRU is built to strict international standards and fitted with numerous emergency disconnection and stop valve systems, which monitor the transfer process and enable a quick disconnection and isolation of any area of operation if a problem arises.

FIRE: Unlike LNG, natural gas can ignite when converted back to its gaseous state if:
the gas is unable to escape; there is the right amount of oxygen present in the vicinity ( not too much and not too little); and a source of ignition is present. As a result of these factors, pools of liquefied natural gas, should they occur and not vaporise, do not ignite as readily as pools of gasoline or diesel fuel.

Despite these qualities, the storage and transfer of gas will be carefully managed at all times to minimise any risk and respond quickly should any incident occur.

The FSRU terminal will be required to be sited a prescribed distance from any potential external ignition point and a sufficient distance from any other facilities should a fire break out. These distances would be calculated as part of the hazard studies carried out during the regulatory assessment process for the project.

NOISE: We anticipate the noise levels associated with the operations of the terminal will be minimal, given the facilities will be located in a major industrial hub. As there is a full time crew stationed on the FSRU, the vessel is also designed to minimise noise outputs and impacts. The impacts of any noise will be assessed as part of the EIS studies.

RELEASE OF SEA WATER: The sea water used on board the FSRU to warm the LNG and convert it to gas will be released back into the harbour. Its composition will be largely unchanged but it will be up to 7 degrees cooler than the ambient water temperature. This water should blend into the rest of the harbour and is not expected to impact the overall water temperature. However, studies will be conducted as part of our EIS process to ensure this process can be managed and will not materially impact the marine environment.

EMISSIONS: Modern LNG carriers, powered by natural gas, are among the most environmentally friendly vessels on the ocean. In addition, the vessels operate on closed-loop. These systems are designed to avoid accidental or fugitive emissions by capturing the small amount of liquid that continuously seeks to return to its natural gaseous state and re-using it in the vessels engines or reliquefying it and returning it back into the tanks.

THE PIPELINE: Only a short pipeline is required to link the terminal to the main Eastern Gas Pipeline (EGP). While a route is yet to be finalised it will run through largely industrial land at the Port and be designed and constructed to Australian Standard 2885. A Safety Management Study will also be conducted to identify and manage any hazards.