Oz Senex Inks Domestic Gas Supply Deal (Update)
(Updates with comment from upstream industry group)
Australian Senex Energy has agreed a domestic gas sales agreement for up to 3.25 petajoules (86mn m³) of natural gas with south-east Queensland manufacturer CSR.
Under the initial three-year agreement, Senex will supply CSR Building Products, a wholly owned subsidiary of CSR, with 0.65 PJ/year (1.95 PJ in total) from January 1, 2020. CSR can extend the agreement by up to a further two years, taking the total contract quantity to 3.25 petajoules, Senex said April 17. Gas will be supplied at the Wallumbilla gas hub in Queensland at a fixed price in line with current market levels, indexed annually.
This agreement represents the first domestic gas contract from Senex’s Project Atlas natural gas development project, Senex said. CSR will use the gas in its three south-east Queensland manufacturing plants that make bricks, plasterboard and insulation. The plants employ 260 people at Brendale, Coopers Plains and Oxley.
“Senex’s initial gas marketing focus is to partner directly with domestic commercial and industrial customers for long-term, enduring and mutually beneficial relationships.
“This agreement with CSR follows the Queensland government’s policy to support new supplies of natural gas into the domestic market and this is a great outcome for Queensland.
“For Senex, 2019 is a transformational year. This gas sales agreement is one of many milestones to come as we deliver our east coast gas development projects,” Senex CEO Ian Davies said.
The primary objective of the Project Atlas natural gas development programme is to reach plateau production of 32 terajoules/d (0.85mn m3/d), with an additional 8 TJ/d (0.21mn m3/d) of installed redundant capacity. Atlas will include around 60 development wells being drilled in its initial campaigns starting late 3Q 2019, according to Senex. The final investment decision regarding Project Atlas was taken last October.
Manufacturers needs gas: Appea
The Senex announcement came as the Energy Users Association of Australia released a report highlighting manufacturers’ concerns about long-term gas supply.
“Natural gas is an essential feedstock for many Australian manufacturers. Over 200,000 people work in manufacturing jobs that rely heavily on gas. There is no substitute for natural gas in many manufacturing processes,” said the Australian Petroleum Production & Exploration Association (Appea).
Senex’s new supply contract is part of the billions of dollars in investment undertaken by the gas industry to bring more gas into the market, supporting both domestic gas consumption and export projects that are underpinning much of Australia’s economic growth.
“In the past two years, we have seen significant announcements from Arrow Energy, Shell Australia, Cooper Energy, Strike Energy, GLNG, Australia Pacific LNG, Origin Energy, Santos and Senex to bring on new supply in various parts of eastern Australia,” Appea CEO Andrew McConville said. “But significant gas resources in Victoria and New South Wales are still unable to be developed.
“Restrictions on supply in southern states are starting to bite, but common sense tells us the only way to meet ongoing demand is more supply. Queensland is to be congratulated for continuing to develop its natural gas resources. We continue to encourage other east coast states to follow Queensland’s lead.”