Moomba Gas Plant Fire

01 Jan 2004Archived News Climate Change Matters

A fire in Santos' main natural gas plant in Moomba, SA last week has no doubt left many gas consumers wondering how it will affect their gas supply. At this stage it appears that only NSW and South Australian gas customers will be directly affected.

 

The event has been declared as Force Majeure; thus it is likely to have some impact on supply security and may have an impact on pricing.

SUPPLY SECURITY

Santos has indicated that the plant will not be at full production for another two months, however production at lower levels has already recommenced. Various media reported on Tuesday that production at the plant has increased to 40 percent of typical levels. To further supplement supply, additional gas is being transported from Victoria to South Australia and New South Wales via the SEAGas and Duke Eastern Gas Pipelines respectively.

In a media release dated 5 January, AGL indicated that there has been minimal impact on NSW industrial customers with only four major gas users being affected. Although none are planned at present, any future shutdowns will be staged as per government approved procedures.

A number of South Australian businesses have been affected, and the South Australian government has indicated that major gas using companies may face further intermittent restrictions over the next two months during periods of increased demand.

Should it be required, either the retailer or respective network provider will contact individual companies to notify them of the need to shed load. This will be carried out in accordance with the order of priority tables approved by each state government.

PRICE IMPACTS

NSW Customers

Some retailers that source gas from Moomba on behalf of their contract customers, have indicated that it will pass through additional haulage and retail costs incurred by arranging alternative supply. This should not affect customers that negotiated firm prices during Force Majeure events as part of their contract agreement.

As network charges for contract customers are gas source dependent, there may be either a slight increase or decrease in network charges for customers supplied via the Moomba to Wilton pipeline. The actual impact is yet to be determined as some gas is still being supplied via the limited production at Moomba.

For customers already supplied with gas sourced from Victoria, there should be no change to retail or network pricing.

SA Customers

Origin Energy indicated in its financial impact statement on 5 January that the additional costs are "expected to be recovered from contract customers and the tariff market". Again, this should not affect customers that negotiated firm prices during Force Majeure events.

Minimising the Impact Now and in the Future

  • Check contract conditions. Can your retailer pass through the amount? Can you cancel the contract or change supplier under a Force Majeure Event?
  • Review the short term opportunities for reducing gas use, whether it be energy efficiency or alternative fuels.
  • Make sure any renegotiated contract does not allow the retailer to pass through additional costs under a third party Force Majeure Event.
  • Review plans for alternate energy supplies during situations of supply interruptions - both electricity and natural gas.
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