AGL Energy Limited has announced that it will divest non-core and under-performing gas assets and activities.
Core projects to be retained include the Camden Gas Project, Gloucester Gas Project, Silver Springs underground storage facility, Wallumbilla Liquefied Petroleum Gas plant and the recently opened Newcastle Gas Storage Facility (NGSF). Effective immediately, these assets will be transferred to AGL’s recently formed Group Operations function to deliver greater operational efficiency, productivity improvements and to leverage expertise from across AGL.
AGL has confirmed that it would not proceed with the proposed Camden Northern Expansion Project, which has been on hold since February 2013. The Camden Gas Project will continue its current operations focused on reducing production costs.
Assets to be divested include the Hunter Gas Project assets (PEL 4 and PEL 267) and associated agricultural activities.
While there is significant coal seam gas in the Hunter Valley, the overlay of Critical Industry Clusters and the two kilometre setback result in this resource not being economic to develop. Other assets to be divested include PEL 2 (which includes the North Camden area), AGL’s interests in the Cooper Oil Project (ATP 1056P), Spring Gully (ATP 592P) and the Moranbah assets. PELs 2, 4 and 267 will be sold as part of the NSW Government’s PEL buy-back scheme.
Gloucester Gas Project
The Gloucester Gas Project will assist AGL to secure competitively priced gas for our NSW customers. AGL has recently signed an agreement for the removal of flowback water to an approved treatment facility. This will enable AGL to conduct flow testing on the four Waukivory pilot wells over a period of approximately six months.
For the past 18 months, AGL has designated the Moranbah assets as “held for sale.” In accordance with accounting standards, no depreciation charges associated with these assets have been brought to account over this period. To date, the sale process has not identified a buyer of the Moranbah assets. From a commercial viewpoint a sale process for the asset is ongoing.
The sale of Cooper Oil is underway and expected to result in a loss on sale of approximately $7 million to be recognised as an impairment charge, and will be included as a significant item in the FY15 accounts.