Gas Quality: Competition Policy Gas Quality: Competition Policy and Economic Development in and Economic Development in

Western Australia Western Australia

K. Peter KolfSenior ManagerOffice of Energy

AcknowledgmentsAcknowledgments

Mostly a commercial issue

To do with access to the DBNGP

Spill over into safety & technical areas

Customer satisfaction a major issue

Some environmental concerns

The Gas Quality The Gas Quality Debate in Western Debate in Western AustraliaAustralia

Typical Natural Gas Typical Natural Gas Compositions and Compositions and PropertiesProperties

Source: Gas & Fuel Corp of Vic (www.gasfuel.com.au) & WA Office of Energy

W AustNorth West

Shelf

Sth Aust& NSW

Gidgealpa

QldRoma

Comment

Methane CH4 (% by vol) 88.1 91.1 87.4 Combustion

Ethane C2H6 (% by vol) 4.9 4.7 5.4 Comb/Feedsock

Propane C3H8 (% by vol) 2.3 1.02 1.9 Comb/LPG

Butane C4H10 (% by vol) 0.7 0.3 0.8 Comb/LPG

Pentane C5H12 (% by vol) 0.1 0.1 0.5 Condensate

N2 + O2 (% by vol) 1.4 0.4 3.6 Inert

CO2 (% by vol) 2.6 2.4 0.4 Inert/Corrosive

Other Components:

Total Sulphur (mg/m3) n/a n/a n/a Env’tal/Corrosive/Safety

Hydrogen Sulphide (mg/m3) n/a n/a n/a Env’tal/Safety

Water Vapour (mg/m3) n/a n/a n/a Corrosive

Mercury n/a n/a n/a Corrosive

Dust, Gums etc n/a n/a n/a Various

Radioactive (Bq/m3) n/a n/a n/a Env’tal/Safety

Properties:

Heating Value (MJ/m3) 39.6 39.0 40.1Relative Density (air=1) 0.643 0.619 0.64Wobbe Index 49.4 49.6 50.1

Industry & Power Gen. 85.5%Low SulphurLow Hydrogen Sulphide

Commercial & Residential 5.9%Minimum Wobbe Index

LPG 5.5%High LPGLow CO2

Low N2

Moderate 33.9%

Extensive 21.7%

SUPPLY

Feedstock 3.1%Low LPGLow CO2 Low N2

DEMAND

Minimum 44.4%

Gas Supply and DemandGas Supply and DemandLocal WALocal WA

Gas Resources(Excluding LNG contracts)

Gas Production1995/96 Local WA

ModerateTreatment 27.7%

ExtensiveTreatment 63.6%

MinimumTreatment 8.7%

Gas Resources & Gas Resources & ProductionProduction

ModerateTreatment 33.9%

ExtensiveTreatment 21.7%

MinimumTreatment 44.4%

Inlet Gas Guality Inlet Gas Guality EnvelopesEnvelopes

Methane & Nitrogen only

Methane & Propane only

WI = 46.0 MJ/m3

WI = 51.5 MJ/m3

100% Methane

Inerts=7.0%, CO2=4.0%

HHV = 42.3 MJ/m3, CO2=4.0%

WI = 47.3 MJ/m3

Inerts=5.0%, CO2=3.6%

HHV = 37.3 MJ/m3, CO2=0%

HHV = 41.0 MJ/m3, CO2=3.6%

HHV = 35.1 MJ/m3, CO2=0%

43

44

45

46

47

48

49

50

51

52

53

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Propane + Nitrogen gas equivalent (mol%)

Wob

be In

dex

(MJ/

m3 )

North West Shelf Gas North West Shelf Gas FieldsFields

CS 2

CS 1

DampierNorth West Shelf Project

Pilbara

GGPDBNGP

Wandoo

North RankinGoodwyn

CampbellSinbad

Harriet

Barrow IslandEast Spar

Crest

Skate

Griffin

Chinook

TubridgiRoller

Saladin

Cossack

Wanaea

Rosette

Tidepole

Gorgon

Angel

Bambra

ChrysaorDionysus

Echo

Perseus

Wilcox

WonnichMaitland

Keast

Marcedon/Pyrenees

West Tryal Rocks

Spar

Pasco

Scarborough

19.5

20.0

20.5

21.0

21.5

113.5 114.0 114.5 115.0 115.5 116.0 116.5 117.0 117.5 118.0

Longitude (degree)

Latit

ude

(deg

ree)

Developed Reserves

Undeveloped Reserves

Static Resources

INDIAN OCEAN

Exmouth

22.0

22.5

113.0

BROWSEBASIN

BONAPARTEBASIN

CANNINGBASIN

OFFICERBASIN

EUCLABASIN

PERTHBASIN

CARNAVONBASIN

Inlet Gas GualityInlet Gas Guality(Raw Gas)(Raw Gas)

Wob

be In

dex

(MJ/

cu m

)

32

34

36

38

40

42

44

46

48

50

52

54

56

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

Propane + Nitrogen gas equivalent (mol%)

NOTE:

1. Raw gas is assumed. No minimum treatment.2. Dots represent all existing Developed, Undeveloped, Static reserves/resources.

Cat A New Cat A GGT

Inlet Gas GualityInlet Gas Guality(After Minimum Treatment)(After Minimum Treatment)

32

34

36

38

40

42

44

46

48

50

52

54

56

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

Propane + Nitrogen gas equivalent (mol%)

Wob

be In

dex

(MJ/

cu m

)

NOTE :

1. Dots represent all existing Developed, Undeveloped, Static reserves/resources.

Cat A New Cat A GGT

Inlet Gas GualityInlet Gas Guality(After Moderate Treatment, into Cat A)(After Moderate Treatment, into Cat A)

32

34

36

38

40

42

44

46

48

50

52

54

56

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36

Propane + Nitrogen gas equivalent (mol%)

Wob

be In

dex

(MJ/

cu m

)

NOTE :

1. Dots represent all existing Developed, Undeveloped, Static reserves/resources.3. Fields outside CAT A require high cost processing.

Cat A New Cat A GGT

Natural Gas in WANatural Gas in WA

Minimum Treatment

Moderate Treatment

Extensive Treatment

Browse & Bonaparte Basins

Current DBNGP Spec.

Widening DBNGP Spec.

High cost CO2 or N2 removal

Committed for local contracts & export

Reasonable probability future

contracts

Low probability future contracts

-

10,000

20,000

30,000

40,000

50,000

Reserves/ Resources 1997

Total DemandGas Quality(excluding Browse & Bonaparte Basin)

PJ Total: 51 EJ

Total: 40 EJTotal: 43 EJ

Natural Gas in WANatural Gas in WA

NWS Gas(after moderate or

minimum treatment)

Other fields

Extensive Treatment

Browse & Bonaparte Basin

Current DBNGP Spec.

Widening DBNGP Spec.

High cost CO2 or N2 removal

Committed for local contracts

Poss. NWSG contract ext.

Additional DBNGP

GGP

Pilbara

Committed for export

LNG Contract Extension

LNG Train 4

LNG Train 5

LNG Train 6 (Gorgon)

LNG Train 7 (Gorgon)

-

10,000

20,000

30,000

40,000

50,000

Reserves/Resources 1997

Gas Quality(excluding Browse & Bonaparte Basin)

Total Demand

PJ

(Current DBNGP Spec)

Total: 40 EJ

Total: 51 EJ

Total: 43 EJ

Prerequisite for physical interconnection

Gas appliances designed for Australian market should be suitable on any major gas distribution system in Australia

Avoid need for parallel pipeline system with different gas quality if possible

Australian Standard Australian Standard on Gas Quality on Gas Quality

SELECTED COMPONENTSSELECTED COMPONENTSGAS QUALITY SPECIFICATIONS - STATES AND GAS QUALITY SPECIFICATIONS - STATES AND TERRITORIES OF AUSTRALIA AND NEW ZEALAND.TERRITORIES OF AUSTRALIA AND NEW ZEALAND.

Gas Characteristic NSW Vic SouthAust

Qld WADBNGP

WAGGP

NT NewZealand

Heating ValueMJ/m3 (dry)

37.45 36.51 -41.0

37.45 or36.69

35.0 -43.0

39.1 -42.3

35.5 -42.5

38 -47

Wobbe Index 47.4 -51.1

46.02 - 50.86

47.4 -51.5

47 -52

48.5 -51.0

46 -51.5

47 - 54

46 -52

Total Inerts(mole %)

6% 5% 7%

Total sulphur(mg/m3)

23 45.74 115 50 10 10 30 50

Hydrogen sulphide(mg/m3)

5.7 6.0 11.5 7 2 5 10 5

Carbon dioxide(%v/v)

3 3 3 3.6 3.6 3

Water vapour(mg/m3)

113 112 112 65 48 48 80 100

LPG (Tonnes/TJ)

1.45

Relative Density 0.8

Industrial vs Industrial vs Commercial/ResidedtialCommercial/ResidedtialGas Guality RequirementsGas Guality Requirements

44

45

46

47

48

49

50

51

52

53

Propane + Nitrogen gas equivalent (mol%)

Wob

be In

dex

(MJ/

m3 )

IndustrialSpecification

Commercial/ResidentialSpecification

WI = 51.5

WI = 46

WI = 51

WI = 47.3

Changes In Gas Quality Over Changes In Gas Quality Over TimeTime

Time

Wob

be In

dex

WI = 51.5

WI = 46

In line gas quality

Changes In Gas Quality Over Changes In Gas Quality Over TimeTime

Time

Wob

be In

dex

WI = 51.5

WI = 46

In line gas quality

Should Gas Quality provide for Specialised Users (feedstock, natural gas vehicles)?

Should contracts be allowed to limit gas quality specifications?

Is there a need for a Total Inerts Specification?

Should “In Line” Comingling be allowed?

Should transmission charges vary with gas quality?

Who has ownership of gas components?

Other IssuesOther Issues

Increase Total Inerts by 0.5 mol%

Introduce an “Emergency” Gas Quality Specification

Introduce a “New Contracts” Specification

Allow transmission price to vary with gas quality

Allow a “risk premium” to be charged where “in line” comingling takes place

Changes to Gas Quality Changes to Gas Quality Regulations in Western Regulations in Western AustraliaAustralia

Gas Quality is the Gas Industry equivalent to the railway gauge problem

50 cents/GJ penalty if we get it wrong

Ultimate contractual problems

Gas quality appliance requirements that differ across Australia

Hindering of access to gas pipelines

Unnecessary flaring/reinjection of associated gas

Possible duplication of pipelines with different quality specifications

Lost production $7.5 billion (PV $3.8 billion)

ConclusionsConclusions