In July 2004, Energy Developments and Western Power signed a 20-year power purchase agreement to supply electricity to the West Kimberley towns of Broome, Derby, Camballin/Looma, Fitzroy Crossing and Halls Creek in the north of Western Australia.
Under the agreement, Energy Developments will construct four LNG-fuelled power stations and one diesel-fuelled power station in the West Kimberley. These power stations will have an initial generating capacity of 52MW, potentially growing to 76MW by the end of the 20-year agreement.
The company recently began construction at its LNG plant near Karratha in the Pilbara region. This plant will be supplied by North West Shelf gas, delivered via the Dampier-Bunbury natural gas pipeline and then transported to the West Kimberley region by road.
Energy Developments managing director Chris Laurie said the company remained on schedule to start commercial operation of the power stations in early-to-mid 2007. The Broome facility is expected to be commissioned in March or April next year; Looma is due to come online in April; Derby in May; Fitzroy Crossing in June; and Halls Creek in July.
“Supply of the major components of the plant is progressing in accordance with schedule,” Laurie said.
“The skid-mounted LNG plant, Caterpillar generator sets, LNG storage tanks and LNG road tankers have either shipped or are in production and expected to meet the planned shipping dates. Contractors have been selected to complete the civil works and the mechanical and electrical installation of the components.”
The company has also brought forward the expansion of the Karratha LNG plant from 160 tonnes per day to 200tpd in order to meet the significant increase in demand for energy in the rapidly growing Kimberley region. Originally planned to reach a 200tpd capacity in 2016, the plant will now be able to deliver at that level from its first day of production, according to Laurie.
But Energy Developments is not immune to the growing problem of project cost blowouts.
Following a detailed analysis of the estimated cost of the WKPP, including contingency, the company now forecasts a 23% increase in the original budget of $150 million to $185 million.
Laurie said he was disappointed with the capital cost increase.
“The majority of the increase was attributable to the dramatic increase in the cost of construction and civil resources and materials in that region of Western Australia,” he said.
“The increase in capital costs will be met from the company’s existing cash reserves and undrawn facilities.”
The total project cost including financing, development costs and capitalised interest is now expected to increase from the initial estimate of $180 million to $210 million.
Meanwhile in Central Queensland, Energy Development’s 32MW German Creek CMM project remains on track for commissioning in late July.
The $43 million project will capture and use methane gas from Anglo Coal’s German Creek mine, preventing up to 1 million tonnes of carbon dioxide equivalent per annum leaking into the atmosphere.
Laurie said the project was expected to ramp up to full commercial operation by September 30, with the first electricity generation planned for August.
The project is expected to receive up to $15.4 million from the Australian Government’s Greenhouse Gas Abatement Scheme.
