Mondarra Gas Storage Facility - developing a more flexible gas market

Michael Puls

Business Development Manager, APA Group

WA Power & Gas Conference 11 March 2014

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Agenda

About APA

Mondarra Gas Storage Facility

How it works

Services offered

How it’s being used

Flexible gas contracting

Summary/ Questions

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About APA

Australia’s largest natural gas pipeline owners

APA natural gas pipelines (including investments)

Other natural gas pipelines

Gas resource Gas production

Perth

Darwin

Melbourne

Sydney

Brisbane

Adelaide

Gladstone

Mount Isa

Moomba

APA owned and operated assets

Transmission pipelines 14,100 km

Gas storage Mondarra Gas Storage

Dandenong LNG

Distribution networks 25,000 km mains

1.25m gas users

Power generation 6 power plants

430 MW

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Mondarra Gas Storage Facility

1972-94 Mondarra produced 25PJ gas

1994 – reservoir converted into a gas storage facility

2013 - expanded to 15PJ useable gas storage capacity

Strategically located

– intersection of WA’s two major pipelines

First commercial storage facility in WA

– 1 of only 2 nationally

Mitigates short term security of supply risk

Increases flexibility, creating options to manage gas production and consumption

Source: APA & AER State of the Energy Market 2011

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Mondarra – how it works “INJECTION”

Gas is injected into the reservoir through wells M8, M6 & M1

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Mondarra – how it works “WITHDRAWAL”

Gas can be withdrawn from both PGP and/or DBNGP through wells M8, M6 & M1

To PGP

To DBNGP

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Mondarra services

Storage services:

– Flexible approach: services tailored to suit customer requirements

Transport services

– Access to swaps & other secondary market transport options

Gas Loan Service

– Provides access to up to 100TJ of gas per customer in an emergency

Injection Firm As Available

Storage Firm As Available

Withdrawal Firm As Available

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Mondarra – how’s it being used

1. Security of supply

– Gas available close to major centres of demand

– Multiple transport options

2. Seasonal & short term services

– Manage peak demand

– Take advantage of short term and spot market trading opportunities

3. Support management of upstream & downstream assets

– Manage commissioning, ramp up & maintenance periods

4. Flexible contracting

– Limit take-or-pay obligations through optimum (risk-weighted) level of firm supply and/or spot purchases and/or gas loan

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Flexible Contracting Matching supply and demand: Gas Sellers generally want to sell 100% take-or-pay contracts, so

how do you contract?

In this example you need to be able to manage demand between 0 to 13 TJ/day… what’s the appropriate level to contract at?

Traditional

Flexible

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Flexible Contracting – 1 month view

DCQ

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Flexible Contracting – reducing cost

Traditional gas supply arrangements…

– Costs: Gas contract at MDQ: 6TJ/d @ $7.50 $16.4m

Gas transport contract at MDQ @ $1.55 $ 3.4m

Total $19.8m

– Risks: Take or pay obligation vs demand Pay for flexibility Supply interruption

Flexible contracting using storage…

– Costs: Gas contract at DCQ 4 TJ/d @ $7.50 $11.0m

Gas transport contract at DCQ @ $1.55 $2.3m

Gas Storage contract at 2TJ/d Inj/Withd $0.8m

Spot gas (2TJ/d x 180 days x $5) $1.8m

Spot gas transport in/out (2TJ/d x 180 days x DBP/PGP) $0.6m

Total $16.5m

– Risks: Largely mitigated with reduced costs

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Summary

Mondarra can deliver:

Security of supply

Seasonal & short term services

Support to manage upstream & downstream assets

Flexible contracting: reducing gas supply chain costs, managing risk & creating flexibility

¿Questions?

For further information contact Michael Puls

Transmission, APA Group Tel: +61 8 6189 4346 E-mail: michael.puls@apa.com.au

or visit APA’s website

www.apa.com.au