APA to expand Pilbara gas pipeline

THE BOURSE WHISPERER: Australian natural gas infrastructure company APA Group is set to expand the capacity of the Goldfields Gas Pipeline.

The expansion is anticipated to meet new demand for gas in the ever-growing Pilbara mining sector.

 

Location of Goldfields Gas Pipeline expansion. Source: Company announcement

 

The expansion is supported by a new 20-year gas transportation agreement the company has struck with mining giant and Pilbara stalwart Rio Tinto.

APA owns 88.2 per cent of the Goldfields Gas Pipeline through its involvement in the Goldfields Gas Transmission Joint Venture.

“This is our third expansion in the last three years, and given the developments in the region, we don’t expect it to be the last,” APA Group managing director Mick McCormack said in the company’s announcement to the Australian Securities Exchange.

“All of these expansions have been underpinned by contracts and are further proof of the growth prospects that APA has in a market with increasing demand for natural gas.”

The proposed expansion will include the installation of additional compression at the existing Yarraloola and Paraburdoo compressor stations.

It will deliver an additional 20 terrajoules of gas per day, which is an increase of approximately 13 per cent of the pipeline’s current capacity.

APA has already commenced engineering design work and procurement activities for the expansion project, with construction scheduled to be completed in mid-2013.

APA is managing the construction project on behalf of the Goldfields Gas Transmission Joint Venture.

The additional capacity has been contracted by Rio Tinto under a new 20 year agreement, to supply the expansion of Rio Tinto’s mining operations in the Pilbara.

This includes the West Angeles mine site which is to be developed as a new power generation hub to support expansion of mining operations in the east Pilbara.