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Thursday, 31 May 1973
Page: 2982

Mr CONNOR (Cunningham) (Minister for Minerals and Energy) - I move:

That Senate amendment No. 1 be disagreed to.

The Government policy opposes this amendment, which states that no pipeline work exceeding $2m in cost can be undertaken until it has been referred to the Public Works Committee. In the Senate debate it was acknowledged that the works of other statutory corporations were not liable to be considered by the Public Works Committee. The immediate objective of the Bill, in setting up a Pipeline Authority is to enable it to acquire the 5 ordinary shares of the East Australia PipelineCorporation Ltd, which are wholly owned by Australian Gas Light Co. Full feasibility studies have already been completed by overseas consultants on behalf of East Australian Pipeline Corporation Ltd. A survey was made of a chosen route and environmental impact studies provided to the New South Wales Government in respect of 3 distinct routes linking Gidgealpa and Sydney.

A major order for 206,000 tons of 34 inch pipes has been placed with Japanese suppliers by the same company with the intention of its constructing a pipeline and being ready to take delivery of gas supplies within 2$ years from the dedication of the gas supplies by the Gidgealpa consortium. The pipe specifications were to the X65 specification of the Battelle Institute (USA) and its notch-test requirements. Under the terms of the arrangement entered into between the Commonwealth and Australian Gas Light Co. and East Australian Pipeline Corporation Ltd, the Commonwealth acquires the benefits of the feasibility study, technology and planning work already done, and in turn accepts responsibility for the various commitments of those companies. In all respects it will stand in the shoes of East Australian Pipeline Corporation Ltd by acquiring its company structure. The staffs of East Australian Pipeline Corporation Limited and those of Mr James Donald, the executive officer of the Authority, are working continuously in exchange of information. The EAPC staff will be given the right, to transfer to the service of the Authority.

Five shipments of Japanese pipes, being of 34 inch diameter, have already arrived in Australia. Property in all pipes has been transferred to the Commonwealth and payment has been made by the Commonwealth on shipment. They are being located at Newcastle, Sydney and Adelaide in accordance with transport proximity to various sectors of the pipelines, and tenders have been called for the supply of necessary gate valves. The continued employment of 600 foundry workers in Melbourne and Ballarat is dependent on the valve contracts.

The nine producing companies of the Gidgealpa consortium, with the special need for refining equipment to remove the impurities I have mentioned in the debate on clauses 13 (1) (d) and 13 (1) (c), are in a most difficult financial position. Their commitment over the 25 years of their contract for such equipment will be approximately $320m, of which $133m must be invested between now and the end of 1976. Only three of these companies which have the Adelaide gas supply contract have paid any dividends. Their profits have not been adequate to service the exploration effort and short term loans have had to be obtained to make up the deficiency. Between them the consortium companies can provide only $33m of the commitment until the end of 1976, and the other $10Om must come from bank accommodation. Stringent requirements are being imposed on them by their respective bankers.

The first gas processing plant will require 20 to 22 months to complete and finance will be available from the bankers only when they are satisfied on the broader aspects of the Cooper Basin development project. All of these companies are carrying on with borrowed funds and have been seriously embarrassed by the 5 months delay during the New South Wales environmental impact inquiry and consideration of the Commissioner's report and findings, which have not yet been published. EAPC will be in a position to call tenders within 3 weeks of publication, award a contract within 15 weeks, commence construction in 27 weeks, and finish the main line of the central route in 85 weeks. If the southern route is adopted an additional 25 weeks will be involved. In a project of this type, large contracts provide for continuity of production, economies of scale and continuity of employment, preventing the loss of skilled and experienced mcn.

The Sydney-Gidgealpa project has already been thoroughly costed under the terms of the feasibility study obtained and adopted by the Australian Gas Light Co., which is the oldest and most experienced company in gas production in Australia, lt has hard fisted administration and whatever may be the merits of a Public Works Committee investigation, there can only be delay, difficulties and financial losses to the Authority and all other participating interests if further examined. In the United States of America there are 170,000 miles of natural gas mains to serve 210 million people. On a proportionate basis 11,000 miles would be economically practicable for Australia's 13 million inhabitants. The proposed national grid system would be less than 5,000 miles in length. The Government rejects the Senate amendment in clause 13 a.

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