Central Petroleum’s Dingo Gas Pipeline project, located in the remote Northern Territory, has been a remarkably successful project for the Australian pipeline industry in 2015.
From the initial application for a production licence beginning in July 2013, through to an earlier than expected commissioning in April 2014 at under 10 per cent below budget, Central Petroleum has executed a first-class construction in the Australian outback.
The project scope included laying approximately 40 km of 4.5 inch Fiberspar FS LPJ 1500(X) spoolable composite pipe; 3 km of 4 inch API 5L X42 PSL2 steel pipeline; and the construction of a city gate station at Brewer Estate, Brewer Road, Hugh, approximately 10 km South of Alice Springs.
It also included the construction of control and communications systems at the company’s Dingo-2 and -3 gas wells, a city gate station, and a sales line to the 36 MW open-cycle Owen Springs Power Station, plus the test and commission of systems.
According to Central Petroleum General Manager Richard Cottee, the project’s construction is an important milestone for the company, as it enables Central to supply the domestic gas market from two established conventional fields centred near Alice Springs.
Mr Cottee, also a former Managing Director of QGC, told The Australian Pipeliner that the pipeline satisfies Central’s requirement to have a physical connection to the Owens Springs Power Station, required to deliver gas under its gas sales agreement with the Territory Generation.
Constructing a pipeline in the Outback
Mr Cottee says that constructing the Dingo Gas Project was an entirely new venture for the company.
“Prior to the acquisition of the Magellan assets, Central was still only an exploration company,” says Mr Cottee.
“Palm Valley is an established producing field. The project was the inaugural development project for Central and allowed Central to build and show our capability to deliver projects on time and budget.”
Mr Cottee says it was highly important to the company to engage local contractors and suppliers.
“We think local sourcing is an important part of building a supportive local network which includes direct employees but also contractor support and material supplies.
“Businesses don’t end at the site gate. Where possible it should involve the whole community.”
The trenching contractor employed for the project was Marais Laying Technologies, which employed innovative technology to deal with the remoteness and environmental sensitivity of the project.
Other contractors included Ottoway Engineering which completed the assembly and construction of the surface facilities plant and equipment. Ottoway Engineering also engaged several local subcontractors for its works, including a company named Chambers Engineering.
Civil works were completed by another local company, Neutral Junction Proprietors; concrete slabs and pipe supports were supplied by local company, Alan Dobbs Contracting; and another local firm, NT Links, provided project offices, crib rooms, and amenities.
As a project with a fairly diverse set of procurement needs, the project used around 40 different suppliers/package vendors from around Australian and overseas to provide things as diverse as pressure vessels, cables, instruments, pipelines, pond liners, valves, pumps, generator, electrical equipment room, air compressors and more.
Logistical challenges in the Outback
There were multiple different logistical challenges faced by the project, due its highly remote location.
These challenges included freighting over 250 lengths of steel pipe to the site into southern end of the Northern Territory, and the limited local depth in contractors available to provide services, and at a cost-effective price for what may be routine electrical and mechanical items. According to Central Petroleum, specialist contractors virtually had to travel from interstate.
Mr Cottee says that those challenges ultimately become an issue of planning and managing your timetable.
“Freight is expensive; that affects everything. Whatever you purchase, even if using a local supplier, things still come from interstate, so there is a delay of days as a minimum from ordering to it being available.”
Mr Cottee says the engineering challenges for the project, however, were not particularly different to most resource projects in Australia.
“These are most commonly getting a design that has packages largely skid mounted (pre-assembled modules) so they can be fabricated off site in a workshop and then freighted to site for assembly.
“The challenge with this is to get all packages to connect properly to each other so the interfaces between them in the design are key issue. There were two separate horizontal direction drills (HDDs): one under the Adelaide to Alice Springs railway, and the other underneath Brewer Road at Hugh.”
Managing the sensitive local environment was a primary concern of Central Petroleum’s.
“As with any such project, we had to develop and implement an environmental management plan. This included direct involvement with the NT Central Land Council on cultural heritage and native title matters, and the NT Department of Mines and Energy as the managing department for the EMP,” notes Mr Cottee.
“Following these, archaeological and anthropological surveys were undertaken to identify any sites of cultural significance in the areas affected by the project.”
Dingo and the Northern Territory gas frontier
According to Richard Cottee, Central Petroleum is squarely focusing its operations on domestic supply and developing the Australian domestic gas market.
“We think the export LNG market is well supplied and with the current outlook for export gas prices the domestic market is much more attractive. What is most useful is to have options.
“The Territory will be a major gas hub and that gives us options to supply both domestic and export markets. For the development of our projects it is strategically important for future cash flows to be underpinned by stable, Australian dollar domestic gas contracts.”
The development of a booming gas industry in the Northern Territory is also critical to the social development of those living in the Territory, including its massive indigenous population.
“It’s all about the jobs,” says Mr Cottee.
“The development of a stable gas industry means there will be solid, well-paid jobs for the long term. It means people have access to steady incomes and spending locally. It means the development of local public infrastructure and an improved quality of life.
“Importantly, it also means kids – the next generation – don’t have to go away to the south for employment training and for decent jobs. Likewise, the local indigenous people have more options and opportunities in their local area.
“This industry can play a huge role in raising the quality of life and building local communities.”
Central is not just talking the talk, either.
The company has been working on three employment strategies in establishing the Dingo Gas Project:
According to Mr Cottee, these are all intended to benefit local people and the local community.
“Family Values for Working Families attempts to use remote operating technologies to allow our employees to operate the site from the more convenient location on the edge of Alice and thereby have more time at home with their families.
“Our aim is to minimise the number of people required at site. The Northern Territory for Northern Territorians project is to give working preference to workers hired locally, reducing reliance on fly-in-fly-out employees. And Traditional Values for Traditional Owners gives work preference to traditional owners.”
What’s next for Central?
Mr Cottee says that, slowly but surely, Central is taking its place as the central player in the Northern Territory’s end of the Australian domestic gas market.
“With the recent acquisition of a half share in the Mereenie field, we are now consolidating production from the Southern Amadeus Basin and can supply enough gas to justify the development of the North East Gas Interconnect (NEGI) pipeline which is needed to meet the demand shortages of Australia’s south-eastern urban centres.
“The NEGI pipeline is supported by the Territory Government and the Council of Australian Governments and is currently out to tender for construction. It will provide an infrastructure base that can underpin the development of many other smaller Territory gas producers who will drive supply and develop a wider competitive domestic gas supply industry.
“This strengthens the economies of the Territory and Australia with Central Petroleum playing a central role.”
This article was featured in the July 2015 edition of The Australian Pipeliner.
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