Joint power plan for Isa [ 26may06 ]

THE Australian Gas Light Company (AGL) is teaming with State Government-owned electricity generator CS Energy to boost power supplies for the rush of mining developments at Mount Isa.The parties have entered into a joint development agreement to look at options for upgrading the 325 megawatt (MW) Mica Creek gas-fired power station at Mount Isa.
The plan is to expand the station by 70 to 100MW at a projected cost of between $150 million and $200 million by 2010 in an effort to meet expected growing energy demand in the area, driven by mining developments around Mount Isa.
AGL's focus under the agreement is to secure a long-term supply of gas for the power station and CS Energy will oversee a redesign study and will operate the upgraded station.
AGL managing director Paul Anthony said the agreement made good sense for both parties.
"This agreement with Queensland's largest government-owned generator secures a platform for growth for both parties given the complementary nature of AGL's and CS Energy's future business interests in the Mount Isa region, a fast growing region in Australia," he said.
"The joint development agreement with CS Energy further cements AGL's interests in Queensland which includes the development of a 370MW gas-fired power station at Townsville and the proposed Papua New Guinea to Queensland natural gas pipeline in a 50 per cent consortium with Petronus Australia Ltd."
The agreement will see the parties jointly fund the cost of investigating the development and an initial study into the upgrade is expected to be completed by the end of the year.
CS Energy Chief Executive Mark Chatfield said the involvement of AGL would give the upgrade project a boost.
"Entering into this arrangement with AGL will enhance viability of the upgrade project by joining up with a partner that has the capability of securing competitively priced energy supplies from 2010 and utilising the complementary development and marketing skills of each organisation," he said.
Gas supply for the power station is currently supplied from the Ballera gas plant under a gas contract between the Cooper Basin producers and Xstrata, and transported through the Carpentaria gas pipeline for use by CS Energy.
The remaining term of the gas contract is about six years.
AGL shares closed down 40c yesterday at $16.75.