July 16 (Bloomberg) -- Western Australia, generator of more than a third of the nation's exports, restarted the state's biggest power station late yesterday, helping to ease a gas shortage that may cost A$6.7 billion ($6.4 billion).

The coal-fired Collie Power Station, able to produce 330 megawatts of electricity, will reduce the shortfall triggered by a June 3 explosion that damaged pipelines at Apache Corp.'s plant on Varanus Island, state Energy Minister Francis Logan said in a statement today.

Collie was shut down for unplanned maintenance at the end of May because of damaged turbine blades, exacerbating the impact of the Varanus Island blast that cut 30 percent of Western Australia's gas supplies. The restart of the Verve Energy-operated plant will reduce the need for more expensive diesel being burned for power generation and make more gas available for industry, the minister said.

``I'm expecting some gas to be released to the market almost immediately through the Gas Bulletin Board at current market levels,'' Logan said in the statement.

The state introduced a Gas Bulletin Board July 2 to allow gas users and producers to make trades through an e-mail-based system. The board, which allows minimum trades of 0.1 terajoules, has attracted 23 registered buyers and sellers.

Varanus Explosion

Apache said June 23 it expects to resume 57 percent of supplies from a blast-damaged plant on Varanus Island off the state's northwest coast by mid-August, with full capacity to be returned in December.

Mining companies and small businesses have been scrambling to secure fuel since the blast after the government gave hospitals and other essential services priority.

Since the disruption, small businesses have been contacted by energy retailer Alinta Ltd., a unit of Sydney-based Babcock & Brown Power, late in their working day to inform them of how much gas they can expect in the next 24 hours.

The Varanus plant's shutdown removed about 350 terajoules a day of supplies from the state's 1,000 terajoules-a-day market. Before the explosion, the state's main electricity grid was producing around 2,500 megawatts a day, a spokesman for the minister said.

The government on June 12 ordered the restart of the mothballed Muja AB station, also in Collie, to counter the effects of the outage.

The shortage had already cost the Western Australian economy in the vicinity of A$2.4 billion, the Chamber of Commerce and Industry said July 10. ``With gas supply expected to be restricted until December 2008, CCI estimates the overall cost to be around A$6.7 billion.''

To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net

Last Updated: July 15, 2008 22:09 EDT