AGL Energy to divest significant gas assets

An aerial view of the Newcastle Gas Storage Facility.

An aerial view of the Newcastle Gas Storage Facility.

AGL Energy has flagged around $A600 million worth of asset write-downs for its upstream business.

Following a review of its upstream operations, AGL now plans to focus on core gas projects and divest non-core and under-performing gas assets and activities, with total after tax write-downs for the 2014–15 financial year expected to be around $A590 million.

Of these write-downs, the Gloucester Gas Project has suffered an $A193 million drop in value, with a further $A237 million write-down at the Moranbah Gas Project.

Core projects to be retained by the company include the Camden Gas Project, Gloucester Gas Project, Silver Springs underground storage facility, Wallumbilla Liquefied Petroleum Gas Plant and the Newcastle Gas Storage Facility.

Meanwhile, the company will not proceed with the proposed Camden Northern Expansion Project, which has been on hold since February 2013.

The proposed Northern Expansion Project involved twelve well surface locations containing up to 6 wellheads each, with the potential to supply approximately 580,000 NSW households.

The existing operations at Camden have been producing CSG since 2001, and currently provides approximately five percent of NSW’s natural gas needs.

Additional assets to be divested include permits PEL 4 and PEL 267 in the Hunter Gas Project, PEL 2 in the North Camden area and the Moranbah Gas Project assets.

PELs 2, 4 and 267 will be sold as part of the NSW Government’s PEL buy-back scheme.

The company said that while there is significant CSG in the Hunter Valley, the overlay of critical industry clusters and the 2 km setback, part of the NSW Government’s CSG exclusion zones, result in the resource not being economic to develop.

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