June 13, 2008

Alcoa and Latent Partner for Gas

Alcoa of Australia and Latent Petroleum Limited have formed a joint venture that could change the energy supply landscape of Western Australia.

Launched by the Minister for the Mid West and Wheatbelt, the Hon Kim Chance MLC, the project will appraise and develop the Warro Gas Field north of Perth. The field is located onshore, close to existing gas pipeline infrastructure. If successful, Alcoa will farm-in up to a 65% interest in the project.
Alcoa of Australia Managing Director Alan Cransberg said ensuring competitiveness and diversity of gas supply is critical for Western Australia.
“Western Australia depends on natural gas to power households, support essential services, and secure longevity for industry.
“Natural gas also underpins the State’s long term response to climate change by providing a source of clean energy.”
“Through clean natural gas, every tonne of alumina Alcoa makes in Western Australia produces half the greenhouse footprint than if made in China.”
Mr Cransberg said this latest collaboration builds on Alcoa's long history of underpinning energy infrastructure in Western Australia.
25 years ago, Alcoa and the State Government partnered to underwrite a long term take-or-pay contract and the funding of the Dampier to Bunbury Gas Pipeline to enable development of the North West Shelf gas project. These initiatives are delivering stable, low cost energy to industry and communities in Perth and the South West.
In 2007, Alcoa also entered into an agreement with ARC Energy in which Alcoa pre-paid A$ 40 million to support ARC Energy’s gas exploration program in the Canning Basin.
“Western Australia is experiencing a serious shortage of gas with commercially viable supply failing to meet the State’s growing demand. This has been exacerbated by the loss of supply from
Varanus Island, and reinforces the importance of progression in finding new energy sources." Mr Cransberg said.
"The time to act is now. By partnering with Latent Petroleum, Alcoa is doing its part to find solutions and create a secure energy future for the State.”
Mr Cransberg acknowledged the State Government’s strong support for the project, and the Government’s efforts in working to ensure long term energy security for Western Australia.

Alcoa’s Australian operations make up an integrated aluminium industry which includes mines, refineries, smelters, rolled products plants and a recycling operation. Alcoa of Australia has been a major Australian exporter for some 40 years. It directly employs around 6,280 people plus another 1,500 contractors, predominantly in regional Australia.

Alcoa of Australia is part of Alcoa World Alumina and Chemicals (AWAC) which is 60-percent owned by Alcoa Inc. and 40-percent owned by Alumina Limited.  Alcoa Inc has 97,000 employees in 34 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland.
Alcoa’s Contribution to Energy Infrastructure in Western Australia

  • Alcoa’s operations have contributed to the development of energy infrastructure in Western Australia.
  • Alcoa’s operations underwrote the original construction of the Dampier to Bunbury Gas Pipeline in the 1980’s via its take or pay gas contract with SECWA.
  • Alcoa underwrote 50% of the pipeline’s debt servicing and capital repayments and contributed over $1.4 billion over almost 20 years.  Alcoa derived no benefit when the State sold the pipeline for $2.4 billion in 1998.
  • The pipeline has delivered stable, low-cost energy supplies to businesses and communities in Perth and the South West of the state.
  • Alcoa is a member of the Consortium which bought the pipeline in 2004 to secure its expansion.  Alcoa is a 20% owner of the pipeline.
  • The consortium has committed $1.8 billion to expanding the pipeline since May 2005.
  • The pipeline has already been duplicated for about 50% of its length.  The Stage 5B Expansion Project recently announced will mean that the pipeline will be duplicated for 75-80% of its length by mid 2010.
  • Expansion of the pipeline enables further development in the State by meeting existing and future demand for energy.
  • Alcoa and Alinta have partnered to build greenhouse-friendly cogeneration plants at Alcoa’s refineries. 
  • Two cogen plants are operating at Pinjarra refinery and supply power to the WA electricity grid. 
  • Two Open Cycle plants commenced operation at Wagerup in October 2007 to supply reserve capacity to the market and may be converted to cogeneration units to meet future Wagerup steam requirements.