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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 liquefied 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) vessel. 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 transferred into an underground pipeline which will join into NSW’s main gas transmission network.

Project Overview factsheet.

How much will the Project cost?

The import terminal facility is expected to cost between $200m – $250m.

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?

The current Development Consent for the Project, received in April 2019, allows for up to 26 cargoes of LNG to be received at the Terminal each year. This equates to more than 70% of NSW’s current gas demand.

AIE is now seeking a modification of this Consent to allow greater volumes of natural gas to flow through the Terminal.

This has been prompted by customers expressing a demand for natural gas, particularly during the winter season, which exceeds the volumes approved under the current Development Consent.

The added capacity can be achieved by simply increasing the number of LNG cargoes received at the Terminal each year.

 How will the process work?

AIE has procured 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 to an LNG carrier, but with the added 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 hoses.

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 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.

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. 

Modelling undertaken as part of the Project’s EIS, indicated that the release of cool water from the FSRU will only have minor impacts on seawater temperatures and these impacts are expected to be confined to within the port limits. The cool water discharge will partially offset elevated harbour temperatures that have resulted from warm water discharges from other port users. 

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 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 it will be transferred onshore from the FSRU, via cryogenic loading arms located on the jetty. The gas will then be transferred via an underground pipeline into the main gas transmission network and on to customers.

The pipeline will be designed and constructed to Australian Standard AS2885, which is the standard applicable to the design, construction, testing, operation and maintenance of gas pipelines of this nature.

Use of a pipeline means there will be no need to truck LNG from the Port to 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?

The FSRU contracted for the Project, the Hoegh Galleon, has a capacity of around 170,000 cubic metres. She is 297 metres in length and 43 metres wide. Her deck is 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.

To see the Galleon undertaking sea trials click here.

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 has been 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 associated with the Project. As part of our current Development Consent we have approval for 26 shipments of LNG per annum and we are seeking a modification of our approval to increase that number.

We anticipate current customer needs can be serviced by around 46 shipments each year, which is still a small proportion of the 800 plus ship arrivals in Port Kembla annually. We will work closely with Port authorities at all times to manage any impacts on other Port 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. Studies undertaken as part of the EIS indicate impacts of the Port Kembla Gas Terminal on existing port users will be minimal and manageable and we will work with the Port Authority to ensure we don’t impact the cruise trade.

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 making long term contracts to industrial gas users, the Project could 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 consumers located close to the source of supply enjoy a competitive advantage over those 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 may provide 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. Bunkering is the ability to re-fuel ships powered by LNG, 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?

If  you or your company are interested in becoming involved in the Project, please email us via the website.

Please note that AIE has awarded the construction contract for the Port Kembla Gas Terminal and associated pipeline to Spiecapag Soletanche Bachy (SCSB).

A local participation plan was a key part of the construction contract tender process and SCSB will be engaging all contractors for the construction phase. To register your interest with SCSB visit www.spiecapag.com.au/suppliers

We are anticipating construction commence after a Final Investment Decision, which is expected next year. There will then be around 14 months of construction before the Terminal is operational.

If your interest is for the operational phase, we will be looking at potential expressions of interest for various services commencing from 2020. Details of these services will be published on our website in due course.

 

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.

More information about our community engagement activities to date is provided in Chapter 7 of our Environmental Impact Statement.

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 June 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 needs. It will deliver a reliable supply of gas for NSW homes and businesses.

The supply of new, competitively priced gas directly into the NSW transmission network will also help reduce the transportation costs users currently pay to access supplies from Queensland, Victoria or South Australia.

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 Co., Inc. 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 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 between the producing gas fields and NSW demand, using a cheaper seaborne “virtual pipeline” is more economic.

NEXT STEPS

 

What are the timeframes for the Project?

Development consent for the initial Project scope was granted by the NSW Government in April 2019.

Additional demand from customers has now meant AIE is seeking a modification of this Consent to allow greater volumes of natural gas to flow through the Terminal.

Factoring in the time required to attain this modification, we are now targeting a Final Investment Decision (FID) on the Project in 2020.

We are continuing to finalise a number of management plans and licence requirements that will allow us to commence construction shortly after FID. It is anticipated construction of the Project will take around 14-16 months.

 

PROJECT APPROVALS

What was the assessment process for the Project?

In June 2018, Port Kembla was announced by AIE as the preferred location for its proposed LNG import terminal. Later that month the Project was declared Critical State Significant Infrastructure (CSSI) by the NSW Government, meaning it was deemed to be essential for NSW’s economic, social and/or environmental benefit. The CSSI designation clearly set out the approval pathway the Project needed to follow and delivered the clearest possible planning assessment pathway and timeframe.

Documents from each step of the assessment process can be viewed at the NSW Government’s Major Projects website and also in the Environmental Approvals section of the AIE website.

  • July 2018 –  AIE submitted its Preliminary Environmental Assessment (PEA) to the NSW Government, outlining the scope of the proposed Project
  • The NSW Government reviewed the PEA and then issued its Secretary’s Environmental Assessment Requirements (SEARs). The SEARs detailed the studies and assessments required to be included in the Project’s Environmental Impact Statement (EIS).
  • In early November 2018, AIE lodged the EIS for the Project with the NSW Government. The EIS is over 2000 pages long. It contains scientific assessments on areas including: hazard and risk; air quality; noise; traffic; marine ecology; water resources; waste management; heritage; soils and contamination; landscape and visual and social and economic impacts. It also includes a series of management measures to help minimise any impacts of the Project. 
  • The EIS was placed on public exhibition from November 14 through to December 14, 2018. A total of twenty three submissions were received from Government agencies, interest groups, businesses and individuals.
  • AIE then lodged its Response to Submissions document with the NSW Government in early February 2019.
  • In April 2019, Development Consent approving the Project was issued by the NSW Government, following a thorough review of the EIS and Response to Submissions.
  • In October 2019, AIE lodged a Modification to the Development Consent requesting to increase the capacity of the Terminal. The modification was prompted by customers expressing a demand for natural gas, particularly during the winter season, which exceeds the volumes approved under the current Development Consent. The added capacity can be achieved by simply increasing the number of LNG cargoes received at the Terminal each year.

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

How have the risks associated with the Project been assessed?

As with any industrial project we have worked with and will continue to work with all relevant authorities to ensure risks are minimised and managed to the greatest extent possible. See our Operational Safeguards factsheet for more information.

The Port Kembla Gas Terminal Environmental Impact Statement (EIS) was required to identify all risks associated with the Project, no matter how unlikely their occurrence. It is over 2,000 pages long and contains a number of studies, including those assessing hazard and risk and environmental studies on aspects of the project like noise, air quality, and social impacts.

See our Operational Safeguards factsheet for more information

Overall, the EIS found the environmental and social impacts of the Project are limited and that the potential economic benefits are significant. The EIS was then thoroughly reviewed by experts from various NSW Government agencies as part of the assessment process, and development consent was granted.

Now the project is approved, emergency response plans for the terminal will be developed in consultation with the Port Authority, other port users and neighbouring industrial sites.

Transportation: The transportation of LNG by ship commenced almost 60 years ago and the industry is well established. LNG 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: In its liquid state, LNG is not flammable and if spilled will quickly evaporate. Unlike LNG, natural gas can ignite when converted back to its gaseous state if a combination of factors occur: 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.

The storage and transfer of gas will be carefully managed at all times to minimise any risk. As part of the EIS process, thorough hazard and risk assessments have been undertaken and were reviewed by various government agencies.

The Project will have safety systems in place including fire detection and firefighting systems in line with  AS 3846-2005 The handling and transport of dangerous cargoes in port areas. A range of firefighting and protection systems will be installed on board the FSRU including gas detection, emergency shutdown and isolation mechanisms, and firewater and suppression systems. The wharf area will also host gas detection and firefighting systems. 

NOISE: The EIS found that noise impacts would be limited to the construction period of around 10 – 12 months. 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. 

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. Modelling undertaken as part of the EIS indicates that the release of cold water from the FSRU will disperse quickly and only have minor impacts on seawater temperatures, possibly partially offsetting the existing elevated ocean temperatures in the Port which are a result of warm water discharges from other operations.

Any impacts to water temperature are expected to be confined to within Port limits.

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 with the main gas transmission network. 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.

© Australian Industrial Energy 2019