pipeline to eastern markets, page-2

I thought I'd print the article.ENERGY company AGL Energy has secured a pipeline deal with Epic Energy that will allow a $140 million gas pipeline to be built, completing the final link between eastern gas markets.

The proposed 180-kilometre pipeline, known as the QSN Link, will transport gas from Queensland to the Moomba-Adelaide pipeline and Moomba-Sydney pipeline.

AGL managing director Paul Anthony said the pipeline would create the final link to form an interconnected eastern Australia pipeline network as well as delivering gas into AGL's wholesale gas hub at Moomba at prices below existing contract levels.

"This link is strategically important in monetising and delivering the coal seam methane AGL acquired with our recent upstream gas investment in, and gas contract with, QGC (Queensland Gas Company)," he said.

The pipeline will transport up to 390 petajoules of natural gas along the Wallumbilla-to-Moomba corridor over 15 years from January 2009.

Epic Energy, owner/operator of the the Pilbara energy pipeline in Western Australia and the south-west Queensland pipeline, would build, own and operate the QSN Link and new compression facilities, AGL said.

An analyst, who declined to be named, said the deal was positive for all involved but that AGL was taking on some risk.

"This is all about supply," the analyst said. "For AGL it means there are additional areas to source gas for (the) NSW retail load.

"They are not experts in upstream gas and they need to push enough gas through the pipeline."

The analyst said the only negative effect of the gas network would fall on Santos, Australia's largest domestic gas producer.

"This could put pricing pressures out of the Cooper Basin, where Santos produces sales (of) gas, ethane, crude oil and gas liquids," he said.

"But they have seen this coming for a long time, so I don't think it will be a big problem."

Mr Anthony said the agreement would introduce new competitive sources of gas into the NSW, southern Australia and Mt Isa gas markets.

AGL shares added 42¢ to $16.