This year, the Australian Pipeline Industry Association (APIA) is celebrating its fortieth year as the peak body for Australia’s transmission sector. Speaking with APIA Chief Executive Cheryl Cartwright about the association and the gas transmission sector, she comes straight to the point – gas transmission is a key to Australia’s gas industry chain.

“Clearly transmission is a critical link in the chain of the gas industry. Without safe, efficient and economic transportation of natural gas, many of our industries would be forced to use more expensive fuels or the natural gas would be transported by road or rail – a much more dangerous, costly and environmentally fraught method of transportation.”

Federal support and effective policy

The new National Gas Law (NGL) came into effect on 1 July 2008, with a new regulatory regime now in place. The new law has been designed to streamline the economic regulation of energy industries, bringing gas into line with the electricity law and streamlining regulation of the four sectors: gas transmission, gas distribution, electricity transmission and electricity distribution.

Ms Cartwright explains the effects of the regulatory changes for the transmission sector. Traditionally and for various reasons, says Ms Cartwright, electricity transmission and distribution as well as gas distribution have been more highly regulated than gas transmission.

“Streamlining of the four sectors under [the NGL] meant that any compromises in the new law and regulations introduced more intrusive regulation for the gas transmission industry than had previously been the case,” she says. “APIA and the Regulatory Affairs committee worked closely – and in detail – during the development of the new law to help reduce the negative impact on the gas transmission industry.

“While the new law has not introduced better regulatory practice for gas transmission than the previous law, through negotiations during the drafting of the legislation it is certainly more workable than earlier drafts.”

However Ms Cartwright highlights the fact that ‘regulatory risk’ remains an issue for the industry.

“Currently, when the industry invests in new pipeline infrastructure, the pipelines tend to be built to capacity to meet agreed contracts,” she explains. “The most efficient longer-term investment would see pipelines being built with extra capacity. However should a company build extra capacity, it faces the risk of being regulated and having the return on its investment reduced. Instead, investment is undertaken in pipelines built to capacity, which means that, when there is an increase in demand, there must be further investment in compression or ‘looping’ to expand capacity.

“Clearly this is a more costly way to fund infrastructure. While investment will continue, in the longer term, it is not the most efficient way to invest in infrastructure.”

Climate Change

Climate change has provided new challenges for APIA and its members, including the planned introduction of an emissions trading scheme (ETS) and a mandatory renewable energy target (MRET) of 20 per cent renewable energy by 2020.

“There are many challenges and opportunities for the gas and the pipeline industries,” Ms Cartwright says. “The industry must participate in emissions reporting and was involved in negotiations with officials before the system was introduced.”

Indeed, APIA entered the climate change debate early, promoting the use of natural gas as a ‘cleaner’ alternative to coal for energy generation.

“Even after politicians publicly accepted that there should be an increase in demand for natural gas as part of a carbon-constrained future, the Government’s recently released Green Paper has not demonstrated support for the industry,” she says.

“Nevertheless, as gas should be used both as an alternative to coal and as a back-up fuel for energy generation by renewable sources, the gas transmission industry will be closely involved in any new policy developments.”

A challenge, however, will be the effects of the MRET if the scheme is not broadened to include lower-emission technologies such as natural gas.

“If the Government continues with its plans to introduce a mandatory renewable energy target, without expanding the definition to include ‘lower-emission’ technologies, then the increased cost to power generators of meeting the MRET requirements of 20 per cent renewable energy will force them to look at the cheapest form of energy generation for the remaining 80 per cent of their power generation.

“If the definition of MRET is expanded to include natural gas, there will be increased use of natural gas in base load power generation, which would help lead to lower emissions.”

Ms Cartwright readily acknowledges that the new economic environment raises new opportunities for the sector. The transmission industry will need to respond to an increased demand for natural gas for power generation, as an appropriate cost imposed on carbon emissions would see many industries switch to gas, she explains. Moreover, natural gas will also be increasingly used as a back-up fuel for renewable power generation, which she says is by its nature, unreliable.

Ms Cartwright also acknowledges that all sectors of the economy, including business, government and consumers, will pay more for power under an ETS. However APIA hopes to ensure that the transmission sector is not disadvantaged or unfairly penalised under the new schemes.

Ensuring the future – research, skills, training and a “gold standard”

APIA is undertaking research worth millions of dollars, working with university researchers and the Government’s AusIndustry program, to develop and grow the transmission sector. The association’s Research and Standards Committee’s links with major international research organisations in North America and Europe, successfully led to the biennial International Pipeline Research Conference being held in Australia in 2007 – the first time this conference had been held in the Southern hemisphere.

On the skills and training front, a new group within the industry – the Young Pipeliners Forum – started in 2006 and is growing exponentially. The group now corresponds with more than 300 people, has attracted non-gas industry members, conducted ‘information tours’ of members’ facilities and held information sessions and networking events for the younger members of the industry. The Association is also working on the development of a program to formally establish specific pipeline engineer skills.

An independent review of Australian Standards in energy industries described the gas transmission Standard, the AS2885, as the ‘Gold’ Standard, and a quality standard that all others should attempt to achieve. After the review of AS2885 Part 1 was completed, APIA held seminars around the nation and in New Zealand to provide guidance and information about AS2885.1.

APIA’s Code of Environmental Practice is also recognised nationally and noted in most state legislation. It was updated two years ago and is currently being updated again to ensure that all aspects of the industry and all changes and new laws are covered.

New technologies

While discussion has centred around the capture and storage of carbon emissions – and the development of the technology that will allow for capture of CO2 emissions from coal-fired power generators, as well as sequestering these emissions in geological ‘sinks’ – Ms Cartwright points out that the importance of transmission of CO2 gases is now being recognised as a critical part of the process.

“Obviously, in most instances, the generators are located some distance from the CO2 deposit sites,” she says. “While the challenges for CO2 transmission are not as complex as those for capture and storage, APIA is working with the Government on developing the appropriate technology and the infrastructure planning so that carbon capture, transportation and storage can be a viable process in the future.”

Linking up with a growing industry

With major exploration and production projects under way or on the drawing board, such as North Rankin 2, Blacktip and Henry gas fields’ development, Ms Cartwright is confident that the transmission sector can continue to meet demand.

She explains that because of State Government rules and regulations, but also because of the negotiations required to access land, the planning phase of a transmission pipeline often takes far longer than the construction of gas transmission infrastructure.

“The gas transmission industry is always ready to take on board new projects,” she says. “As soon as the need arises, the designers, environmental experts and construction teams develop plans for construction of the infrastructure.

“With regard to the expansion of the gas transmission infrastructure, whether current pipelines are expanded or new ones constructed will depend on the Government’s economic policies and where the sources of supply and demand are located.”

Celebrating 40 years and a bright future

This year, APIA celebrates 40 years of service and representation of the transmission sectors. Looking forward, Ms Cartwright believes that the future of the sector is bright.

With the expected increase in demand for natural gas, she says that the majority of APIA members will see increased activity in the design and construction, ownership and management as well as long-term planning of pipelines.

Asked about the APIA’s key achievement over its 40-year life, Ms Cartwright explains that the answer is just that – achieving 40 years in effective operations.

“The reason the Association has survived, indeed prospered, for this length of time is the foresight of the Association’s leaders over time,” she reflects. “The organisation began its life as a networking group for pipeline contractors. But, over time, the leaders of the industry saw the need to broaden the focus to include owners and operators and others in the industry.

“By ensuring that APIA is involved at the time when policies and ideas are being developed, the gas transmission sector has influence on the policies and the type of knowledge that will assist the industry to grow,” Ms Cartwright says.

“In following the great tradition of the Association’s forefathers, APIA will continue to focus on the future. Already, with the success of the Young Pipeliners Forum, we have a system to keep the young people in this great industry, with clearer career paths and access to new opportunities being made available.”

Ms Cartwright explains the association’s current Strategic Plan remains relevant after three years; however, it is about to be reviewed again to ensure new opportunities are not missed.

Ms Cartwright also recognises that capturing new opportunities means working with other energy associations to ensure the best outcomes for the broader energy industries, and ensuring that industry is involved in the important decisions.

APIA’s mantra is to continue to work closely with members and other stakeholders on all the challenges and opportunities for the industry, to help ensure the appropriate changes and developments are in place. Importantly, Ms Cartwright explains that the association will work hard to ensure it remains relevant and the industry vibrant well into the future.