Leigh Creek Energy (LCK) has signed a Heads of Agreement with APT pipelines to facilitate plans to connect to the east coast gas market.
The agreement with APT Pipelines Ltd, a subsidiary of APA Group, is a key milestone for the Leigh Creek Energy Project (LCEP) as it allows for the development of plans for the interconnection of the project with the east coast gas markets.
The non binding Heads of Agreement (HOA) will be effective for at least six months and up to two years.
Under the HOA’s terms, LCK and APA will work closely to identify the most likely route for the interconnection pipeline, review the transport charges to deliver gas to market, review the gas storage potential at the LCEP and review other infrastructure opportunities including power generation.
While gas storage associated with the project is a secondary focus for Leigh Creek Energy, it represents a potential value adding opportunity.
Storage reservoirs are used to store gas on behalf of customers during periods of seasonal low gas demand. The gas stored is withdrawn from storage during periods of high demand and to support variable demand loads such as gas fired peak power generation.
The recent $1.78billion purchase of the Iona 27 PJ gas storage facility in Victoria by Queensland Investment Corporation (from Energy Australia) has highlighted the potential financial benefit of this opportunity.
Gas storage at the LCEP has the potential to provide additional insurance over South Australia’s energy security as gas can be dispatched from storage in the event that the Victorian interconnect is not operating on a day when wind is not dispatching.
Leigh Creek Energy Chairman, Daniel Justyn Peters, said, “With this HOA, LCK continues to meet its goals and deliver on its broader strategy. This is an exciting, and important, milestone in the development of the Leigh Creek Energy Project.
“Beyond the obvious operational progress, we are excited to be working with Australia’s largest natural gas infrastructure operator on how to best bring our gas to market and provide an additional source of gas to the supply constrained east coast gas market.”
Mr Peters said this HOA will help accelerate the LCEP development timetable and provide added confidence to domestic buyers of gas and investors in LCK.
“In addition to this development, the project development team has delivered the JORC compliant coal resource and is aiming to provide the gas certification results by the end of this year, which will complete a further milestone in the development of the LCEP,” Mr Peters said.