APA Group · ASX:APA
APA — Corporate Update (May 2014)
60 slides from APA's corporate update, May 27, 2014
Slide 1: APA Group Western Australian business overview and Mondarra Gas Storage Facility site tour
APA Group Western Australian business overview and Mondarra Gas Storage Facility site tour 27 and 28 May 2014
Slide 2: Presentations and site tour
Presentations and site tour Presentations Western Australia business – Welcome and APA overview – Mick McCormack (Managing Director) – WA business overview – Rob Wheals (Group Executive Transmission) – WA Transmission: mining regions – Steve Lewis (General Manager WA Transmission) – Mondarra Gas S
Slide 3: APA Group overview
APA Group overview Mick McCormack Managing Director and CEO APA Group WA site tour 2014 3
Slide 4: APA executive and management – site tour
APA executive and management – site tour Steve Lewis Barrie Sturgeon Chris Kotsaris Nevenka Codevelle * General Manager Senior Program Head of Investor Relations General Counsel WA Transmission Manager and Communications Michael Puls Ian Duncan * Manager WA Commercial Group Treasurer A
Slide 5: About APA Group
About APA Group APA is Australia’s largest gas infrastructure business APA (23 May 2014) Market A$5.8 billion Gas transmission pipelines and storage capitalisation – Owning and operating two thirds of Australia’s onshore S&P/ASX 50 pipelines MSCI All World Index; – Interconnected pipeline networks
Slide 6: National integrated infrastructure portfolio
National integrated infrastructure portfolio NT link to east coast grid: Feasibility study West Australian infrastructure APA’s WA infrastructure: APA’s east coast grid: Darwin > 7,000 km of pipelines – Pipelines serving mining regions > 3,000 km pipelines 5 major pipelines Gas transport and stora
Slide 7: APA's long term strategy
APA’s long term strategy Strategy is focused on our core business of gas pipelines – transmission and distribution infrastructure Recent WA highlights Facilitating development Enhancing APA’s portfolio of gas Goldfields Gas Pipeline infrastructure assets in Australia’s of gas related projects that
Slide 8: APA Western Australia business overview
APA Western Australia business overview Rob Wheals Group Executive Transmission APA Group WA site tour 2014 8
Slide 9: Western Australia portfolio – significant contribution
Western Australia portfolio – significant contribution 1H14 EBITDA by business segment Energy Investments 9.6% Regulator skid at Newman Power Station Asset Management PILBARA 8.6% PIPELINE SYSTEM Queensland 27.3% Western Australia & Northern New South Territory Wales 23.2% 15.6% Victoria & Goldfield
Slide 10: Western Australia portfolio – strategic infrastructure
Western Australia portfolio – strategic infrastructure Assets Goldfields Gas Pipeline and Commissioned 1996 Newman lateral (88.2%) 1590 km – 2 receipt and 19 delivery points Other laterals (100%) Capacity 175 TJ/d 6 compressor sites (11 units) Fully regulated for 108 TJ/d Pilbara Pipeline
Slide 11: WA gas infrastructure development
WA gas infrastructure development 1960s BONAPARTE Gas discovered and developed in the Perth Basin BASIN 1970s Parmelia Gas Pipeline constructed, delivering gas to Perth BROWSE 1980s BASIN Development of the North West Shelf offshore gas fields Construction of Dampier Bunbury Pipeline Deple
Slide 12: Successful strategy implementation in WA
Successful strategy implementation in WA WA revenue $200m $150m $100m $50m $0m 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2001 2004 2007 2010 2013 Foundation assets: Goldfields Gas FY05 increased Goldfields Gas Pipeline FY11 acquired Emu Downs Wind Farm Pipeline (39.
Slide 13: WA business fundamentals
WA business fundamentals Abundant gas supply Strategic assets 981 PJ Well positioned long life assets 17,384 PJ Skilled and experienced workforce 70,386 PJ Secure revenue Creditworthy customers Long term contracts and/or regulatory certainty 54 Capacity based revenue contracts, relatively
Slide 14: WA portfolio serving mining regions
WA portfolio serving mining regions Gas basins and operating mines near APA’s pipelines, WA Major gas pipeline infrastructure serving the Pilbara and BONAPARTE BASIN Goldfields mining regions BROWSE BASIN Contract renewals – Murrin Murrin Operations (GlencoreXstrata) - 15-year gas CANNING BASIN tr
Slide 15: WA portfolio serving Perth and southwest regions
WA portfolio serving Perth and southwest regions Pilbara Mondarra Gas Storage Facility providing gas supply region security for Perth and the south west region – Expansion completed mid 2013 – Connected to major pipelines – Providing services to four customers, including Synergy – Majority of capa
Slide 16: WA Transmission: mining regions
WA Transmission: mining regions Steve Lewis General Manager WA Transmission APA Group WA site tour 2014 16
Slide 17: Contents
Contents WA Market – Overview – Gas supply and demand – Current issues Mining region – Goldfields Gas Pipeline – Pilbara Pipeline System … after Mondarra Gas Storage Facility presentation South west region – Mondarra Gas Storage Facility and Parmelia Gas Pipeline APA Group WA site tour 2014
Slide 18: WA market – overview
WA market – overview Economic growth is still healthy … WA Gross State Product (GSP) expected to grow at 3.8% from 2015 Based on continuing growth in quantity of merchandise exports (6.5% increase in 2013- 14) as new projects enter production phase Population growth at 3.5% pa with unemploymen
Slide 19: WA market – resources dependent
WA market – resources dependent Resources continues to be the key growth driver The mining/resources industry accounted for 29% of WA’s GSP in 2012-13 Resources projects committed or under construction totals $149 billion (March 2014) China remains WA’s key export market Iron ore and LNG dom
Slide 20: WA market – gas supply
WA market – gas supply Abundant reserves WA proven and probable gas reserves total 89,000 PJ(1) – WA domestic gas use for 2012-13 was 326 PJ (2) – and 1,090 PJ (1) of gas was used for LNG export Gorgon Reindeer But how much is available for the domestic market? Gas Reservation Policy requires 15
Slide 21: WA market – gas demand
WA market – gas demand Gas demand increasing in mining regions … WA total gas demand expected to grow at 1.5–2% per annum to 2024 This is low by historical standards but reflects significant gas price increases that commenced from 2005 Gas demand in the south-west of WA has fallen since 2005 (
Slide 22: WA market – gas industry developments
WA market – gas industry developments The good old days of low gas price are gone … but the market is adjusting to the price shift Gas supply reserves are aplenty … but gas availability depends on price Discussions continue on the future of domestic gas reservation and broadened gas specificat
Slide 23: APA WA Transmission – mining regions
APA WA Transmission – mining regions APA infrastructure well placed to supply growing gas demand in mining sector Goldfields region – Goldfields Gas Pipeline – Mid West Pipeline Pilbara region – Goldfields Gas Pipeline – Pilbara Pipeline System – Telfer Nifty Pipeline Secure long term revenu
Slide 24: Goldfields Gas Pipeline
Goldfields Gas Pipeline Major Resource Projects – March 2014 (Goldfields region) Fully contracted until 2018 Projects current or under development – production > $10m – Average contract term: >19 years Proposed or potential projects – capex > $20m Projects under care and Revenue mix maintenance
Slide 25: Pilbara Pipeline System
Pilbara Pipeline System Acquired December 2012 Integration complete – APA as operator Major Resource Projects – March 2014 (Pilbara region) Capacity re-contracted after expiry of foundation contract – Revenue preserved – Additional capacity available Pilbara Pipeline – Contracts average term:
Slide 26: Mondarra Gas Storage Facility
Mondarra Gas Storage Facility Aidan Trend Mondarra Asset Manager APA Group WA site tour 2014 26
Slide 27: Contents
Contents Gas storage Reservoir modelling Use of gas storage Drilling Mondarra history Construction Site suitability Commissioning Concept development Operation APA Group WA site tour 2014 27
Slide 28: Gas storage
Gas storage Three types of storage – Pipeline storage – e.g. APA pipelines – Above ground storage – e.g. Dandenong LNG Facility – Underground storage – e.g. Mondarra Gas Storage Facility Most common type of underground gas storage site in Australia is depleted gas reservoirs The most important
Slide 29: Why gas storage is required
Why gas storage is required Security of supply – Back up gas supply in case of upstream events – Multiple transport options Seasonal and short term services – Management of peak demand – Mitigates short term supply risks – Take advantage of short term and spot market trading opportunities Supp
Slide 30: Underground gas storage
Underground gas storage Storage provided by the depleted gas reservoir Gas is stored in the porous rock – sandstone, limestone Gas is kept in place by impermeable cap rock – shale, clay Gas is re-injected into the porous rock – like a ‘sponge absorbing water’ Geological properties determin
Slide 31: Mondarra history
Mondarra history 1968 Mondarra gas reservoir discovered by WAPET (West Australian Petroleum Pty Ltd) 1972 -1994 Mondarra produced 25 PJ of gas 1994 Converted to gas storage facility with limited capacity and interconnection 1997 CMS Energy Corporation acquired Mondarra and the Parmelia Gas Pipeline
Slide 32: Site suitability
Site suitability Strategically located – Intersection of WA’s two major pipelines – Both pipelines feed the Perth market Appropriate gas reservoir – Size allows gas volume stored to mitigate short term security of supply risk without needing large volumes of cushion gas – Excellent reservoir cha
Slide 33: Location
Location APA Group WA site tour 2014 33
Slide 34: Concept development
Concept development Flow rate Sub-surface Stored Volume Reservoir capacity? Tariff How many wells? Pressure? Water production etc. Commercial Perth gas crises in 2008 Gas Supply and Emergency 150 TJ/day Management Committee recommendation – storage Customer demand Plant design inputs S
Slide 35: Sub-surface studies
Sub-surface studies Build of 3D static and dynamic simulation reservoir models Rock mechanics studies ensured competent rock in reservoir during pressure cycling Seismic reprocessing and quantitative interpretation to identify high porosity reservoir sections Geophysical review Extensive d
Slide 36: 3D static reservoir model
3D static reservoir model Predictive tool to identify drilling locations Basis for dynamic simulation model APA Group WA site tour 2014 36
Slide 37: Dynamic reservoir model
Dynamic reservoir model Production history matched Forecasting of reservoir performance Predictive tool for future operational scenarios APA Group WA site tour 2014 37
Slide 38: Drilling
Drilling 2 well drilling campaign commenced September 2010 Successful drilling of 2 new gas storage wells – Validated reservoir models – Underpinned major expansion project APA Group WA site tour 2014 38
Slide 39: Plant design
Plant design APA Group WA site tour 2014 39
Slide 40: Construction
Construction 15 months from construction mobilisation to practical completion Size and complexity of plant – 28 ha site – 3,300 m3 concrete – 10.5 km pipe – 1.1 km duplex pipe, mainly class 2500 – 129 km cable – 1200 valves >300 people on site at peak construction – Logistics, camp, IR challen
Slide 41: Compressors
Compressors 70 TJ/day injection rate Up to 150 TJ/day withdrawal rate Flow range 10 to 150 TJ/day Pressure range 4,500kPa to 23,500kPa 2 x Cat 3612 engines driving Aerial recip. compressors. – 3500 HP each Compressors used for both injection and withdrawal Vibration! - foundations 1.8m
Slide 42: Compressor lifts
Compressor lifts Compressor skid weight 160 tonnes each Custom lifting arrangement required as the lift was outside the capacity of any available crane APA Group WA site tour 2014 42
Slide 43: Commissioning
Commissioning Large and complex plant: – Over 2000 I/O’s – 14 different modes of operation – Complex control system – 332 transmitters – 1,200 valves Balancing: – Technical requirements of commissioning – Well performance testing – Commercial desire to commence services Early commissioning of
Slide 44: Earthworks – February 2012
Earthworks – February 2012 APA Group WA site tour 2014 44
Slide 45: Construction progressing – June 2012
Construction progressing – June 2012 APA Group WA site tour 2014 45
Slide 46: Aerial overview – October 2012
Ariel overview – October 2012 APA Group WA site tour 2014 46
Slide 47: Construction nearing completion – January 2013
Construction nearing completion – January 2013 APA Group WA site tour 2014 47
Slide 48: Finished site – July 2013
Finished site – July 2013 APA Group WA site tour 2014 48
Slide 49: Mondarra – how it works “injection”
Mondarra – how it works “injection” Gas is injected into the reservoir via three wells APA Group WA site tour 2014 49
Slide 50: Mondarra – how it works “withdrawal”
Mondarra – how it works “withdrawal” Gas can be withdrawn from the reservoir via To PGP three wells To DBNGP and transported through one or both of the pipelines APA Group WA site tour 2014 50
Slide 51: WA Transmission: south west region
WA Transmission: south west region Steve Lewis General Manager WA Transmission
Slide 52: APA WA Transmission – south west region
APA WA Transmission – south west region South west region gas market – Power generation – Large industrial users – Retail/commercial Parmelia Gas Pipeline and Mondarra Gas Storage Facility provide gas supply security for Perth and the region – Mondarra expansion completed mid 2013 – Connected to
Slide 53: Mondarra and Parmelia services
Mondarra and Parmelia services Storage services: – Flexible approach: services tailored to suit customer requirements Injection Firm As available Storage Firm As available Withdrawal Firm As available Transport services – Access to swaps and other secondary market transport options Gas loan se
Slide 54: Mondarra commercial offer
Mondarra commercial offer FIRM FLEXIBLE Withdrawal Customer 3 Customer 1 Customer 2 Customer 4 Customer 5 Storage Injection Capacity Firm service Flexible services = security of supply = manage shutdowns, commissioning, peak periods, banked gas = flexible contracting (minimise Take- or-Pay) APA
Slide 55: Flexible services – customer focus
Flexible services – customer focus Current contracts Offer intent Sectors include Power Generation, Gas Increasing services: Retail, Industrial/Minerals Processing – Flexible, tailored services – Gas loan Currently ~33% of domgas users (by volume) have Mondarra contracts Increasing reach: –
Slide 56: Flexible contracting
Flexible contracting Gas usage (TJ/day) Typical gas usage in a gas fired power station fluctuates Gas is contracted to match required high daily MDQ quantities (MDQ) DCQ Storage provides buffer for low and high demand periods Injection in low demand periods (orange) and withdrawal in high de
Slide 57: Delivering supply security
Delivering supply security NWS currently provides 55% of WA’s domestic gas supply (actual WA Gas Bulletin Board data May23rd). NWS domestic gas plant is now in its 30th year of operation having been commissioned in 1984. Synergy receives 165 TJ/d under existing NWS contract used for power genera
Slide 58: Mondarra Gas Storage Facility site tour
Mondarra Gas Storage Facility site tour Aidan Trend Mondarra Asset Manager
Slide 59: Mondarra site plan
Mondarra site plan Evaporation pond Compressors Production cooler Production separator Silica gel gas conditioning system Wellhead slug catcher/separator Mondarra site pre expansion Dampier Bunbury Pipeline interconnect Parmelia Gas Pipeline wells interconnect APA Group WA site tour 2014 59
Slide 60: Disclaimer
Disclaimer This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) the responsible entity of the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441) (APA Group). Summary information: This presentation contains summary information abou