The US company Chevron Corp has signed a heads of agreement deal with a company planning to build a gas fired power station in Townsville, northern Queensland.
The proposed deal, with a joint venture between the state-owned Stanwell Corporation Ltd and US Dynegy Power Corp, brings Chevron a step closer to securing the contracts it needs to make construction of a gas pipeline from Papua New Guinea to Queensland economically viable.
The joint venture wants to construct a 766 MWe gas-fired power plant near Townsville. The plant would burn up to around 40 PJ of gas each year. However, Chevron needs another similar sized contract to enable the pipeline project to proceed. It is hoping to sign a deal with Comalco which may build an aluminium plant at Gladstone, Queensland.
The Pinnacle power plant is expected to comprise two gas fired units. The first is expected to enter service in 2001 and the second in 2003. However, the companies involved in the power plant project are concerned that their own plans may be affected by proposals from two government-owned companies to expand coal-fired plants in the state. This could lead to a power surplus, making a new gas-fired project uneconomical. This would affect the gas pipeline project.
The 2400 km pipeline is expected to cost around $3 billion to construct. Gas retailer AGL Ltd and joint venture partner Petronas have been selected to develop the gas transmission scheme. Construction is due to start next January. The gas would be brought ashore at Gladstone.