Gas giant AGL has abandoned natural gas projects in Queensland and New South Wales due to the volatility of commodity prices and long development lead times.
This now means a proposed, high-pressure 100km gas transmission pipeline connecting the company’s Gloucester Gas Project to exiting gas supply networks at Hexham will no longer go ahead as planned.
AGL spokesman Andy Vesey said, given the current price environment affecting the gas industry, it would be unlikely such a pipeline would be built for many years. AGL also there would be no change to its commercial or retail gas activities.
The company said it has sufficient gas for its residential and small business customers following the recent contract with the Gippsland Basin Joint Venture and the planned expansion of Jemena’s Eastern Gas Pipeline. Incremental future gas requirements are likely to be sourced from southern markets, the company said.
AGL advised it expects to recognise an impairment charge of $640 million after tax against the carrying value of its gas exploration and production assets including an increase in rehabilitation provisions. The charge will be recognised in the financial results for the six months ended 31 December 2015.
In Queensland, the company is planning to sell natural gas assets at Moranbah and Spring Gully. The company also said it would cease production at its Camden Gas Project, in south-west Sydney, in 2023 –12 years earlier than expected.