APA’s Australian Gas Pipeline Link May Cost Up to $1.2 Billion

APA Group, whose pipelines deliver more than half of Australia’s natural gas, said a proposed project to connect its Northern Territory and east-coast gas assets would cost as much as A$1.3 billion ($1.2 billion).

The pipeline link would help feed more than $60 billion of liquefied natural gas export projects and meet rising domestic demand, Mick McCormack, managing director of Sydney-based APA, said today in a phone interview. The project may give customers access to any gas source between the Timor Sea north of Australia and the Bass Strait off the southeast coast, he said.

“You would have a whole range of competing gas producers being able to sell their gas anywhere onshore between those two places and then access LNG export facilities,” he said. With LNG plants seeking additional supplies, “we got to thinking, well, where is that gas going to come from?” he said.

APA plans to spend A$2 million to study the viability of the project and expects to reach an investment decision within the next two years, the company said today as it reported a 43 percent drop in first-half profit. The pipeline project would help satisfy demand as the east coast faces surging natural gas prices and potential supply shortages, McCormack said.

One potential route linking the Northern Territory and east coast would cost about A$900 million, while another would cost an estimated A$1.3 billion, he said. APA’s assets include more than 14,000 kilometers (8,700 miles) of gas pipelines, including the Amadeus gas pipeline in the Northern Territory.

BG Group Plc, Santos Ltd. and a venture between ConocoPhillips and Origin Energy Ltd. are developing three LNG ventures on Queensland’s Curtis Island. BG expects gas from “third parties” to account for as much as 20 percent of supply to its plant between 2014 and 2016, it said this month.

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