Gladstone industry hit by gas supply cuts after pipeline fire

Angela Macdonald-SmithSenior resources writer

Mar 7, 2024 – 12.29pm

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Major industries in Gladstone including projects owned by Rio Tinto and Orica are scrambling to deal with a significant reduction in gas supply to the region after a fire on a pipeline forced an emergency workaround to prevent costly plant shutdowns.

The fire on Tuesday affecting the Queensland Gas Pipeline, owned by Jemena, caused the Australian Energy Market Operator to step in, citing a “risk or threat to the adequacy or reliability of supply within the east coast gas system”.

Supply of gas to heavy industry in Gladstone has been reduced. Glenn Hunt

It ordered large industrial gas consumers to reduce or cease usage to keep communities in the Gladstone and Rockhampton areas supplied. Jemena said there was no impact on household gas supply.

The incident comes after Singapore Power last October tapped Goldman Sachs to sell its 40 per cent stake in Jemena, which also owns gas and electricity distribution systems.

The QGP is the primary source of gas supplies to industrial customers in the Gladstone region, which include Rio Tinto alumina refineries at Yarwun and QAL, Rio’s Boyne Island aluminium smelter, QMag and Orica, according to energy market analyst Josh Stabler at adviser Energy Edge. Origin Energy’s Australia Pacific LNG venture and Shell’s Queensland Curtis LNG projects in Curtis Island have not been affected.

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Mr Stabler said that in the absence of the pipeline, the only supply was the much smaller Meridian pipeline and metering station which backs into the QGP. Westside Corporation’s Meridian gas production plant however only produces 38 terajoules a day, while the Gladstone industrial demand is between 125 and 140 terajoules a day.

However, the threat of an extended and severe reduction in gas supplies to the industrial customers has been averted after what Mr Stabler described as an “amazing job” by engineering teams to divert flows from the GLNG pipeline that also runs into the Meridian facility into the QGP.

That has increased gas flows on the QGP to about 70 terajoules a day, about double what the volume would be if it was relying on the Meridian venture alone, he said.

“This type of solution is unorthodox and has required substantial cross-business staff working together: a real success,” Mr Stabler said.

A Rio Tinto spokesman confirmed the company had received notification from Jemena of an incident impacting the QGP. “We are working with Jemena and the Australian Energy Market Operator to understand the impact to our Gladstone operations,” he said.

Orica said it has had to reduce some production at its Yarwun operations because of the cuts in gas supplies. “We have worked closely with Jemena to safely reduce our cyanide production at the site until the incident is resolved,” a spokesman said.