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Gillman industry hub needs more millions

Jan 30, 2015
A desert traveller changes a blown tyre near Mount Hopeless on the unforgiving Strzelecki Track.

A desert traveller changes a blown tyre near Mount Hopeless on the unforgiving Strzelecki Track.

The “oil and gas hub” proposed for the controversial Gillman redevelopment will be needed – as long as unconventional gas projects take off in the Cooper Basin.

The Strzelecki Track in SA’s far north would also need to be sealed to ensure an Adelaide logistics hub can compete with Queensland.

That’s the view of the mining industry, and backed by the South Australian government.

The promise of thousands of new jobs at Gillman is predicated on the development of the oil, gas and transport hub on the 400 hectare piece of Government land.

While the State Government has confirmed that development of the hub is required under the project contract, it won’t say when that part of the project needs to be built. The development of the site is a long-term project that will take place over many years, beginning with the remediation of the land.

The site’s developer – Adelaide Capital Partners – is pitching to investors to fund the project.

Questions remain about the detail of the so-far confidential contract and its value to the taxpayer, but the industry believes the concept of an oil and gas hub is a sound one – with a couple of significant “ifs”.

The chief executive of the SA Chamber of Mines and Energy, Jason Kuchel, told InDaily that the industry would need additional logistics support, particularly if unconventional gas projects in the Cooper Basin took off.

“We definitely see a need over time for a greater oil and gas hub in SA,” Kuchel said.

He said that if the Strzelecki Track was sealed, then Adelaide – rather than Brisbane – would become the logical place from which to service basin operators.

The ranging up of offshore exploration in the Great Australia Bight would add to this need for more logistics support in South Australia.

Mineral Resources and Energy Minister Tom Koutsantonis agreed that sealing the Strzelecki Track would help South Australia compete with Queensland to become the key state for oil and gas support.

Despite the slump in global oil prices, he expressed confidence that the Cooper Basin would become “one of the premiere locations for oil and gas exploration and production in the Southern Hemisphere”.

“Companies will need hubs with the equipment and related services to support his revolution, as well as access to intermodal transport to cope with the level of imports and exports,” he told InDaily.

“In addition, sealing the Strzelecki Track would weather-proof access to the state’s Far North, ensuring the significant amount of plant machinery and equipment can get to the Cooper Basin quickly and safely.

“We are competing with Queensland to be the nation’s oil and gas capital and it is projects like sealing the Strzelecki that will play a key role in our success.”

That project won’t come cheap.

The State Government is seeking funding from the Federal Government to upgrade and seal the Strzelecki at an estimated cost of $450 million.

It announced in February 2014 that it had submitted a proposal to Infrastructure Australia to seal 426km of the track, between Lyndhurst and Innamincka, plus another 26km which connects to the Adventure Way at the Queensland/SA border.

InDaily understands discussions between the state and federal governments continue, including the opportunity for the private sector to contribute directly to the cost of any upgrade.

Debate on the Gillman proposal has been rekindled as energy companies in South Australia and elsewhere are reeling from the oil price slide.

Adelaide headquartered Beach Energy announcing yesterday that it would cut capital expenditure by 20 per cent in response to the drop in oil prices.

The SA-based company says it will defer some projects, reducing capital expenses by up to $55 million, and that possible cuts from its Cooper Basin project partner Santos could lead to further revisions in its expenditure guidance.

However, the State Government is continuing to count on oil and gas as a key part of the local economy.

A delegation of South Australian suppliers to the oil and gas industry will leave today on a study tour of the US.

The businesses – Advanced Focus, Century Group, Fyfe Pty Ltd, Sage Automation and SRA Information Technology – will be accompanied by senior officials from the Department of State Development’s Mining Industry Participation Office and the University of Adelaide’s Australian School of Petroleum.

Koutsantonis said the US company had been transformed by harnessing its energy reserves, leading to cheaper power and a “renaissance” in the country’s advanced manufacturing sector.

“South Australian companies are similarly poised to capitalise on the huge potential of the state’s resources, particularly in the far north,” he said.

The delegation will attend an oil and gas conference hosted by the Australian American Chamber of Commerce.

Koutsantonis says the event is an opportunity for South Australian suppliers to make contacts with US industry players.

The delegation will also visit oil and gas operations in South Texas and Pennsylvania.

 

 

 

 

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