Securing Australia’s domestic gas supply: issues paper

VOPAK VICTORIA ENERGY TERMINAL
Strengthening Australia’s Domestic Gas Supply

A response to the Australian Government’s consultation on the Australian Domestic Gas
Security Mechanism. This document addresses question 12 on the issues paper:

12. What can the states and territories do to ensure their gas needs are met during the energy transition? a. How can the Commonwealth support the states and territories to do this?

The gas demand profile in the transition to a zero net carbon future is currently unclear, making traditional long-term investment in fossil fuel solutions in the form of new gas fields and substantive pipeline infrastructure more challenging to meet the gas demand during this transition period.
Liquid natural gas (LNG) import terminals can provide a secure mechanism to increase supply security over this transition period.
The use of floating storage and regasification units (FSRUs) is well established around the globe as a means of backstopping gas supply security on short notice when compared with conventional developments. LNG import terminals offer a solution which requires a comparatively small capital investment while gaining access to a significant supply of gas in the form of LNG.
LNG import terminals have the capacity to deliver between 600 and 700 TJ to market a day (200 to
240 PJ/pa). This supply can accommodate peak demand or diversion to existing storage facilities to enhance future winter peak demand scenarios.
Considering Australia’s position as a leading LNG exporter, LNG import terminals in key states could support the creation of a virtual gas pipeline using Australian LNG. They could provide supply security without significant capital investment in gas production or pipeline infrastructure and without the consumer being burdened with the cost of what would quickly become redundant infrastructure. Access to a broader global LNG market would remain available to backstop Australian
LNG supply should that not be contractually available.
Government assistance
The Commonwealth and States can support new LNG infrastructure projects by:
• Facilitating a streamlining of approval processes;
• Outwardly supporting the security function that LNG import terminals can provide;
• Supporting the development of these facilities with grants to ensure the delivery of cleaner
energy solutions in keeping with the decarbonisation of new facilities in the sector. info@viclng.com 1 www.victoriaenergyterminal.com.au
20 Friendship Road, Port Botany, NSW 2036
Vopak’s proposal
Victoria accounts for approximately 45 per cent of the total east coast demand for gas, making it by far the greatest user.
The Australian Energy Market Operator (AEMO) has forecast a gas shortage in Victoria in the latter part of this decade as existing gas fields continue to decline, based on scenarios from the 2022 Gas
Statement of Opportunities (GSOO).
Given the larger demand in Victoria, Vopak is proposing to develop and operate the Victoria Energy
Terminal project in Port Phillip Bay. Vopak proposes to design and construct this floating LNG import terminal to help address the anticipated gas shortages expected in the mid to late 2020s and to secure energy supply as Victoria moves towards zero net carbon by 2050.
By supporting an LNG import terminal, with the appropriate profile for emissions and social license,
Victoria will have access to a global LNG market in excess of 450 million tons per annum, of which
Victoria would represent less than 1% based on 2021 gas demand.
The Victoria Energy Terminal will operate for an anticipated 20-year period to support the state’s transition to renewables, but could operate for as little as 10 years if no longer required.
The project is anticipated to be operational from 2026 after which it would act as a peak saver for winter demand, providing an international gas price ceiling for the local market price.
Vopak is working through feasibility and environmental studies and plans to submit the project for environmental referral to the Victorian Planning Minister during Q3 2022 and to the Federal
Environment Minister in early Q4 2022.
About Vopak
Vopak is a global leader of energy infrastructure. It is part of Royal Vopak, a Dutch group which operates a global network of 73 terminals across 23 countries, including all major trade routes. The company has been operating for over 400 years and has an outstanding track record.
Vopak is currently developing new infrastructure solutions to facilitate the introduction of vital future products with a particular focus on low-carbon and renewable hydrogen, CO2, flow batteries and sustainable feedstocks.
Vopak’s Victoria Energy Terminal is a subsidiary of the Vopak LNG division which currently operates four LNG storage terminals in The Netherlands and Mexico (onshore based), and Pakistan and
Columbia (FSRUs), with new developments underway in Germany, China, Pakistan (onshore) and
Singapore. Participation in a new marine based FSRU project in Hong Kong was announced in
December 2021.
Vopak LNG offers terminal services to both gas suppliers and downstream market gas users under an open access model – re-gassifying LNG for dispatch into local gas infrastructure where capacity is contracted to third parties. Vopak does not take ownership of, nor is it involved in the production, shipping or marketing of LNG or gas. This open access model approach can be used as a mechanism to manage near-term shortfalls where excess capacity is available in the terminal.
Vopak LNG leads the development of projects through site identification, concept design, detailed engineering and local approvals, working closely with local stakeholders and partners. Safety and sustainability are of paramount importance to Vopak and all projects developed have to meet info@viclng.com 2 www.victoriaenergyterminal.com.au
20 Friendship Road, Port Botany, NSW 2036
stringent standards to ensure the continued safety of operational staff and communities whilst meeting local regulations and striving for the most effective emissions outcomes wherever possible.
About the Vopak Victoria Energy Terminal
The Vopak Victoria Energy Terminal will be moored at an existing anchorage point in Port Phillip Bay, approximately 19km east of the proposed shore crossing at Avalon, and about 10km from the nearest point to the Port Phillip Bay shoreline at Werribee.
The terminal will receive LNG from import vessels (domestic and/or international), re-gassify it in an on-board facility and supply the gas directly into the Victorian Transmission System via APA Group’s
South West Pipeline. The facility is targeted to be operated with renewable energy sources, to meet sustainability objectives. The terminal will be able to deliver up to 650 TJ/day and will be able to ramp up and down according to demand requirements.
The terminal will be decommissioned and the floating vessel will depart the bay once it is no longer required. Fixed assets will either be removed or neutralized as aligned under the permitting requirements for the project.

-END- info@viclng.com 3 www.victoriaenergyterminal.com.au
20 Friendship Road, Port Botany, NSW 2036