Demystifying some aspects of pipeline investment in Australia

Gas Pipeline Investment

Principal Consultant, Rod Johannessen, authored a chapter on changes to the structure and commercial aspects of the gas transmission industry in the 2017 Gas Price Trends Review, which was prepared by Oakley Greenwood on behalf of the Commonwealth Department of Environment and Energy. Rod has over 20 years experience in the energy sector including working for APA Group for a decade where his final position was as General Manager Strategy and Service Delivery.  Rod has also worked with an international oil and gas company whose Australian operations were based in Perth and an east coast electricity retailer.

Innovation in the gas transmission industry for much of it’s 50 year history has largely been confined to the technical aspects of the construction and operation of pipelines.  In the last 5 to 10 years there have been significant changes that impact on the commercial aspects of pipelines, including the Short Term Trading Markets and the Gas Bulletin Boards.  In the last year a reform program has commenced that is being designed and implemented by the Gas Market Reform Group (GMRG).  The GMRG was established in 2016 by the COAG Energy Council.

The GMRG reforms include a Framework for Negotiation and Arbitration between pipelines and their customers, new Information Disclosure requirements and the introduction of a trading platform and auction for Trading in Pipeline and Compression Capacity.

The chapter on the gas transmission industry in the 2017 Gas Price Trends Review included an analysis of some of the major changes in the transmission industry including how:

  • the re-configuration of some pipelines as bi-directional pipelines (see graphic) is helping to reshape Australian gas markets;
  • tariffs and terms of gas transport agreements are changing; and
  • gas traders are using gas location and time swaps to overcome constraints in the pipeline grid and to reduce their transportation costs.

The report also included an analysis of the cost of transporting gas across multiple pipelines from remote gas basins, some of which are frontier resources, to major demand centres.  The full report can be found at https://www.energy.gov.au/publications/gas-price-trends-review-report

See the OGW Energy Infrastructure Flyer for more information.

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