APA signs gas transport deal with Senex for Atlas project in Queensland
Australian energy infrastructure company APA announced on July 11 the execution of a 20-year gas transport agreement with Senex Energy, majority-owned by Korea’s POSCO International, for its Atlas natural gas development in Queensland’s Surat Basin.
Under the agreement, APA will provide capacity for 60 TJ/day of natural gas transport along APA’s Reedy Creek Wallumbilla Pipeline to the Wallumbilla Hub, supplying additional gas to the east coast gas market expected from the end of 2025.
This agreement follows Senex’s final investment decision on its expansion at Atlas, after receiving final environmental approvals for the Atlas East gas project from the federal government.
In 2022, Senex announced plans to invest more than A$1bn ($680mn) in a major expansion of its Atlas and Roma North developments to boost domestic natural gas supply. These developments aim to increase the company's production to 60 petajoules/year, representing more than 10% of annual east coast gas demand and around 40% of annual Queensland gas demand.
However, government intervention in gas markets in December 2022 caused Senex shareholders to pause the investment until sufficient regulatory and investment certainty could be gained. Senex has now received all major approvals to proceed, including federal EPBC approvals.
As part of the contract, APA will invest approximately A$20mn to increase capacity on APA’s Reedy Creek Wallumbilla Pipeline and Wallumbilla Hub to support Senex’s Atlas expansion. The expansion works will include modifications to existing APA infrastructure.
“This additional gas supply is critically important to Australian gas users at a time when the east coast is facing gas supply shortages as early as 2027,” APA Group CEO Adam Watson said. “Australia’s build-out of renewables needs to accelerate so we can take coal out of the system, but we cannot decarbonise and speed-up the energy transition without gas and without investment along the gas value chain,” he added.
The Australian Competition and Consumer Commission (ACCC) recently reported that Australia’s east coast gas market may experience gas supply shortfalls as early as 2027, a year earlier than previously expected, unless new sources of supply are made available. The ACCC report found that the southern states are expected to rely on gas transported from Queensland for the foreseeable future, and from 2029, Queensland will also require new sources of supply.
Senex last month said it will invest A$650mn to increase gas output in Australia.