APA Group and Cooper Energy announce execution of an agreement (“Transition Agreement”) which outlines terms for the parties to work together to complete the commissioning of the Orbost Gas Processing Plant (“OGPP”), and commence firm supply to Cooper Energy’s term gas customers as early as possible.
The Transition Agreement supplements the existing project documents, and sets aside potential claims and entitlements available to either party. It also provides for the sharing of costs and revenue whilst OGPP commissioning proceeds towards completion. The Transition Agreement is subject to the support of Cooper Energy’s financiers.
APA Managing Director Rob Wheals said “APA and Cooper Energy remain jointly focused on commissioning the plant safely and to a high standard of quality and operating performance. The Transition Agreement provides a practical commercial way forward for both entities to ultimately deliver much needed additional gas to south-east Australia.”
Cooper Energy Managing Director, David Maxwell said “the Transition Agreement has cleared the table so the single focus of APA and Cooper Energy at Orbost is the start-up of firm gas sales from Sole as soon as possible, whilst preserving the incentive for increases in the Orbost gas processing capacity.
“Commissioning has taken much longer than could have been envisaged. The Transition Agreement provides the basis for gas sales from Sole to continue and increase, and for firm gas supply to our customers to commence in advance of Orbost project completion and production at full rates.”
Commissioning and production operations will continue, as set out under the heading “Current and expected work program” below. The parties’ near term objectives for the OGPP are:
• completion of minor plant modifications later this month
• execution of Phase 2 Plant works (scope currently being finalised) planned for the December 2020 quarter; and
• establishment of a stable processing capacity that will enable firm supply from Sole.
Root cause analysis to identify the cause of the foaming that has impeded completion to date is continuing (see “Background” following).
Background
The Sole Gas Project brings a new source of gas supply to south-east Australia. The project comprises two separate elements: an offshore project to develop and connect the gas field managed by Cooper Energy and an onshore project managed by APA to upgrade the OGPP to process Sole gas for supply into the Eastern Gas Pipeline.
The upgrading of the plant to the required performance standards, and the processing and tolling of Sole gas by the OGPP, are provided for under existing development and processing agreements between the parties. The satisfaction of plant performance criteria enables completion of the Development Agreement (the “DA”), commencement of the Gas Processing Agreement (the “GPA”) and commencement of firm gas supply to Cooper Energy’s gas customers.
As advised in updates provided to the ASX, the OGPP has yet to satisfy the plant performance requirements necessary for completion of the DA, one of which is a demonstrated capacity to maintain stable supply of 68 TJ/d.
