PCML SUBMISSION ON THE PROPOSED ACCESS ARRANGEMENT 
FOR THE BALLERA TO MT ISA PIPELINE

Pasminco Century Mine Ltd (PCML) is a Foundation Shipper which has contracted approximately 10% of the current capacity of the pipeline (i.e. the free flow capacity).  In the future it may require small additional quantities of capacity.  PCML provides gas at both the Ballera and Mt Howitt Receipt Points.  It takes delivery of gas at the Mica Creek Power Station Delivery Point where the gas is used to generate power for the Century Mine.

PCML provides the following brief comments on the matters raised in the Issues Paper.  The submission concentrates on one or two matters.  However, PCML supports the more detailed submissions made by others particularly BHP and CS Energy.

As an initial general comment, PCML is concerned that the Queensland Government's approval of the Tariff Arrangement results in a lack of transparency.  Moreover, the combined Tariff Arrangement and Access Arrangement does not have the detail that is usually contained in Access Arrangements which are subject to a full public review.

Section 5.2.2 Information Disclosure

As contended for by others the information disclosed is not sufficient to enable Users and Prospective Users to understand the derivation of the elements in the proposed Access Arrangement and to form an opinion as to the compliances of the Access Arrangement with the provisions of the National Gas Code.

Section 5.2.3 Services Policy

It would be appropriate and usual for there to be other Reference Services such as an Interruptible Service or a Backhaul Service.  It is also unclear why the CGPJV should be entitled to earn additional revenues from Negotiated Services or other Reference Services.  Presumably the setting of the Reference Tariff provides the CGPJV with a full and adequate return on its investment.

Section 5.2.4 Terms and Conditions

PCML supports the submissions of others who contend that the Access Arrangement does not clearly identify the relevant terms and conditions which enable Prospective Users to be sufficiently well informed before making a specific access request.

Section 5.2.5 Trading Policy

A User should be free to access uncontracted, or unused, capacity at alternative Receipt Points or Delivery Points.  Moreover, a User should be free to transfer contracted capacity at a Receipt Point or Delivery Point to other Users.

In circumstances where the CGPJV’s consent is required this should only be withheld on reasonable technical grounds and conditions.  The CGPJV should have no ability to withhold consent on commercial grounds or conditions whether reasonable or otherwise.

Section 5.2.6 Queuing Policy

PCML has no comment on the Queuing Policy at this time.

Section 5.2.7 Extensions /Expansion Policy

The approval of the Regulator should be required before the CGPJV can elect to not have an extension or expansion treated as part of the covered pipeline CP.

PCML’s main concern relates to the expansion of the capacity of the pipeline up to 175 TJ/day.  Section 1.3.5 of the Approved Tariff Arrangement states that:

"The Service Provider is not entitled to recover from Users by way of charges:

a)	the cost of constructing any capital improvement to the pipeline to increase the capacity of the pipeline up to 175 TJ/day; or

b)	the cost of compressor fuel used in the operation of the pipeline except where gas is delivered into the pipeline by or on behalf of the user at a pressure of less than 14,800 kPa."

The clear implication of the approved Tariff Arrangement, and the Access Principles on which the Approved Tariff Arrangement is based, is that the CGPJV will automatically expand the capacity of the pipeline, in increments and by the addition of compression, up to 175 TJ/day as and when that capacity is required.

In PCML's view it is unclear that the CGPJV has discharged its obligation to expand the capacity of the pipeline by the addition of the first compressor.  Moreover, it appears to PCML that pursuant to Section 8.2 of the proposed Access Arrangement the CGPJV is seeking to substantially qualify its obligation under the approved Tariff Arrangement.

PCML submits that the second dot point in Section 8.2 of the proposed Access Arrangement should be deleted and replaced with the following:

"CGPJV will undertake an expansion of capacity of the Pipeline up to a maximum capacity of 175 TJ/day on the request of a User or Prospective User if that User or Prospective User commits, or has committed, to the use of capacity in excess of the current capacity of the pipeline at the Reference Tariff."

PCML is concerned that the current capacity of the pipeline does not appear to be sufficient to meet the contracted pipeline capacity of 96.4 TJ/day.  The following incidents have concerned all shippers:

•	on a number of occasions distillate has had to be used at the MCPS at significant cost to the shippers and power offtakers although total deliveries from the pipeline appear to have been less than 96 TJ/day; 

•	the failure to receive gas at Ballera within contract limits has led to a reduction in individual shipper's line pack and the threat of curtailment of deliveries; and

•	at least one shipper appears to have incurred costs due to the inability of the pipeline to receive gas at Ballera within contract limits.

It seems that in the setting of the Reference Tariff and the 175 TJ/day limit that some account was taken of the need for, and the cost of, compression.  It is unsatisfactory that such an important issue as the precise terms on which the CGPJV committed to compression in discussions with the Queensland Government should be shrouded in obscurity.

It is also most unsatisfactory that the approved Tariff Arrangement provides for a minimum delivery pressure of 2,000 kPa when the major Delivery Point on the pipeline requires a minimum pressure of 3,000 kPa.  This is particularly so as the capacity of the pipeline increases by only 2 TJ/day if the pressure at the MCPS Delivery Point falls from 3,000 kPa to 2,000 kPa.  This gives scope for considerable confusion and obfuscation when the pipeline is close to its maximum capacity.

Section 5.2.8 Term and Review

If the review date of 1 May 2023 is not changed through negotiation it is imperative that major events trigger revisions to the proposed Access Arrangement.  PCML supports the submissions of others on this matter.

Approved Tariff Arrangement

Although the Approved Tariff Arrangement is outside the terms of this review PCML notes that:

•	the adjustment of the base tariff rate for access agreements less than 15 years is exceedingly onerous on prospective users (Section 1.2.2); and 

•	there is an overlap between Sections 1.2.5 and 1.2.6 which could lead to an unintended result.