In 1994, United States energy company Tenneco Energy established a small development office in Brisbane and won the right to build, own and operate the 756 km South West Queensland Pipeline (SWQP) from Ballera to Wallumbilla to supply gas to southeast Queensland. The SWQP, which was constructed in less than 12 months, was commissioned in 1996. The construction project set high standards in Australia for safety and environmental and cultural protection.
On 30 June 1995, Tenneco Energy expanded its portfolio when it acquired the assets of the Pipelines Authority of South Australia (SA) (PASA). Originally known as the Natural Gas Pipelines Authority of South Australia, PASA was formed as a statutory authority by an Act of Parliament in 1967 to construct, own and operate the Moomba to Adelaide Pipeline System (MAPS), with a lateral to Angaston Cement Works. PASA remained a transporter of gas until 1974 when the Act was amended to include the purchase and sale of gas.
At the time of the sale to Tenneco Energy, the purchase and sale of wholesale gas was retained under Government ownership. Construction of the MAPS commenced on 25 October 1968 and was completed on 1 October 1969. First deliveries of gas to Adelaide on 19 November 1969 heralded a new era of energy supply for SA and an opportunity to transform the state’s economy. At the official opening ceremony, then Premier Steele Hall said that the ceremony was about launching SA into the 1970s. The MAPS was important to SA; securing a long-term energy supply for the state, reducing its reliance on coal and providing a source of energy for large industrial users.Article continues below…
In 1996, following a merger between parent company Tenneco Energy and El Paso Energy Corporation, El Paso Energy invited other companies to become shareholders in the new Australian company. The result was Epic Energy, with El Paso Energy and CNG International holding 30 per cent each and Australian firms Allgas Energy, AMP Investments, Axiom Funds Management and Hastings Funds Management each holding a 10 per cent shareholding.
With its Queensland and SA assets running smoothly, Epic turned its attention to the west. In 1998, Epic acquired the Dampier to Bunbury Natural Gas Pipeline (DBNGP) and the Pilbara Energy Pipeline (PEP) in Western Australia (WA), moved its head office from Brisbane to Perth, and turned its focus to the organic growth of its existing pipelines.
Over the next four years, Epic completed major upgrades of both MAPS and DBNGP through additional compression and looping, and also constructed the Burrup Extension Pipeline and Wodgina Lateral in the Pilbara region of WA.
In 2004, Epic experienced a major shakeup of its assets; the company sold the DBNGP, and Hastings Funds Management acquired 100 per cent ownership of the MAPS, the SWQP, the South East Pipeline and the PEP.
The following year Epic relocated its head office to Melbourne. The company turned its focus to recontracting long-term gas transportation agreements on the MAPS and implementation of operational efficiencies in light of the commissioning of the SEA Gas Pipeline.
From 2007, Epic has also focused on establishing reverse flow on the SWQP to provide Queensland (QLD) CSG with new markets, which led to the construction of the QSN Link between Ballera and Moomba in 2008 and the QSN 3 looping expansion, which began in 2010 and is currently in progress.
Expansion to the east and west
Epic Energy Managing Director Matt Brassington says that the continued growth in natural gas usage in the eastern states due to power generation, coupled with the discovery of new gas sources in central QLD, has had a positive impact on Epic’s operations. Customers’ requirements to transport gas to meet increased market demands has resulted in a major expansion of Epic’s assets.
The construction of the QSN Link pipeline, which connects Epic’s SWQP with MAPS and APA Group’s Moomba to Sydney Pipeline, signified the beginning of a truly integrated pipeline system that, for the first time, has enabled Queensland’s CSG reserves to reach southern markets.”
In June 2010, Epic commenced construction of a 937 km duplication of the SWQP that will more than double its capacity to meet growing demand. The new 450 mm diameter pipeline will be offset 10 m from the existing pipeline and follow the same route from Wallumbilla in QLD through to Moomba in SA. Both pipelines and the QSN Link will operate as one pipeline when completed in late 2011.
Demand has seen gas flow in different directions through the SWQP over its 15-year history. Until 2007, gas flowed eastward from the Cooper Basin to Wallumbilla, where it was reversed and flowed in a westerly direction. With an eastern haul contract established in January 2011, following the completion of the QSN3 expansion, the SWQP will be converted into a bi-directional pipeline to provide flexibility in the changing gas market.
In WA, Epic continues to develop the PEP with a new lateral added in 2009 to transport gas from the PEP to a new power station in Karratha. In 2010, Epic leased a portion of the capacity on the Burrup Extension Pipeline to DBP, the current owner and operator of the DBNGP.
The challenges of operating pipelines in Australia
“Pipeline operation essentially deals with the management of hazards associated with pressurised hydrocarbons, the infrastructure that contains the hydrocarbons and the people that interface with the infrastructure. One of the biggest challenges for pipeline operators is to mitigate risk associated with their assets,” says Epic Energy General Manager Operations Clive D’Cruz.
In terms of mitigating risks to its infrastructure, Epic follows the relevant Australian standards to maintain its pipeline system, and is committed to ensuring that its maintenance practices are robust to provide ongoing continuity of supply to its customers.
Mr D’Cruz says “We are continually reviewing and looking at improvements in this area as we believe it is important to learn from what others do and be open to changing practices. We have embarked on a program of utilising a number of internal experts to provide technical training of staff in the operations and maintenance activities of its assets. This has proved successful in the past and is continuing to be developed.”
Epic says another challenge facing pipeline operators is the shortage of skilled labour.
“In the last decade, the impact in the operations area of experienced personnel either leaving the industry due to retirement or to pursue other opportunities has been noticeable. This issue is likely to remain with the industry over the coming years,” says Mr D’Cruz.
Epic says that it sees its employees as its greatest asset, which is why the company invests heavily in training. “Helping employees to develop is crucial to the achievement of Epic’s goals. A minimum number of training days per employee per year is set as part of our business key performance indicators.
“We are also currently developing an onsite technical training facility at our Dry Creek depot in SA, which will assist us in delivering core practical training on actual pipeline equipment,” Mr D’Cruz says.
Epic is continually looking ahead to anticipate the needs of the gas market to ensure that it can meet the transportation needs of its customers.
“Changing gas market dynamics in eastern Australia arising from the development of an LNG export industry at Gladstone and the potential for enormous reserves of shale gas in the Cooper Basin will determine the way Epic expands its pipeline system,” says Matt Brassington.
“Ironically, even though the SWQP has been expanded to increase capacity to export gas from QLD to southern states, there is nothing preventing the reversal and further expansion of that pipeline to supply shale or other unconventional gas to eastern QLD. If configured as a bi-directional pipeline, the SWQP could play a major role in providing security of gas supply to southern states whilst also providing a high capacity route to export markets for Cooper Basin gas.
“In addition to interest from a number of customers in SWQP capacity, we are continuing to see a strong demand for gas transportation to new power station projects in the Pilbara as a result of the mining boom. We expect a number of these projects may come to fruition over the next 12–24 months.”
Mr Brassington adds “Looking ahead, some of the key challenges for the entire pipeline industry include higher capital costs for new projects, and recruiting and retaining skilled personnel in light of increased demand for skilled workers in the mining and LNG industries.”