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Summer gas supplies
Release Date: 04 September 2006
Verve Energy's Chief Executive John Lillywhite welcomed the agreement with Dampier Bunbury Pipeline which will lead to more gas supplies for its power stations.
The agreement helps underpin the next expansion of the Dampier-Bunbury Natural Gas pipeline, Stage 5A.
“The outcome of these negotiations is a positive development for both parties,” Mr Lillywhite said.
“Verve Energy’s entitlements to gas transportation capacity in the pipeline will increase significantly as the result of Stage 4 (which is nearing completion) and Stage 5A which is scheduled for completion in 2008.
“This agreement improves the security of gas supply for our gas-fired power stations - Cockburn, Kwinana, Pinjar and Kemerton - this summer.
“For DBP, the agreement means it is able to proceed with important steel and engineering commitments so that the 2008 completion date can be achieved.”
Mr Lillywhite said the Kemerton peaking power station, which has the flexibility to burn gas or distillate, has been able to take gas since May this year.
“Kemerton peaking power station is fulfilling its role to help keep the lights on, which is why it was built to operate on both fuels," Mr Lillywhite said.
“Verve Energy’s preferred position always was to burn gas. This will become a reality through our Stage 4 and Stage 5A gas transportation entitlements.
“Our new arrangements mean that Kemerton will be able to operate more often on gas in the future. There may still be periods when distillate is needed.”
Since it was commissioned in November 2005, the Kemerton peaking power station has achieved about 300 operating hours, much of it on distillate. Most of its operation on distillate was due to gas curtailments which reduced supplies for power generation, or when coal plant was not available due to overhauls or at times of high winter demand.
Some of the gas curtailments had been necessary because of DBP’s present work to upgrade the pipeline capacity.
DBP has cooperated with Verve Energy through the Stage 4 capacity upgrade to minimise the inevitable reductions in gas supplies during these major programs.
On the subject of domestic gas reservation, Mr Lillywhite said Verve Energy supported the State Government push for a national energy policy which leads to the completion of a State energy policy covering gas and electricity as well as renewable energy.
Energy policy will help specify the best means of ensuring sufficient gas for domestic gas markets. Like the Wholesale Electricity Market, which begins operation next month, Verve Energy favours market-based measures to set price.
In turn, price signals will be transmitted to other energy users.
Verve Energy believes in inter-fuel competition for electricity generation as a means to help set input fuel prices. This is in line with market principles.
Any queries from the media are directed to Verve Energy's Corporate Relations branch.
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