Back on track after gas blast

Apache Corp aims to return to 60% production by mid-August after an explosion at the Varanus Island facility off the coast of Western Australia knocked out a third of gas supplies to the mining region.

Apache Corp aims to return to 60% production by mid-August after an explosion at the Varanus Island facility off the coast of Western Australia knocked out a third of gas supplies to the mining region.

U.S. operator Apache Corp said it expected to restore natural gas production of 180 million cubic feet (mcf) by August 15 and planned to resume full production of 315 mcf by December.

“It’s the first time in 18 years that Apache worldwide has had such an incident. We are doing everything we can and hopefully we can get our production up quicker than our timetable,” Apache’s managing director Tim Wall said.

According to Wall it is too early to quantify total damages from the blast.

Already, Apache and a government body have sent 140 investigators to Varanus Island to determine the cause of the pipeline explosion.

The explosion that occurred on June 3 triggered a dash for alternative energy supplies from industrial customers such as global mining giants BHP Billiton and Rio Tinto, while other miners such as Alcoa have declared force majeure at its Australian alumina operations.

Prime Minister Kevin Rudd has said the disruption to the mining companies could result in a dominos effect, effectively putting the national economy under threat.

Western Australia State premier Alan Carpenter has ordered the reopening of a 60-megawatt coal-fired power station by the end of July, and two other units in August in a bid to fill up the energy shortfall in the state, where about 60% of electricity is generated by gas-fired plants.

Diesel demand in Western Australia has also risen 40% since the blast, as mining companies such as Newcrest Mining and Alcoa switch to diesel from gas in a bid to keep mines and plants in operation.

This article first appeared on Reuters UK website http://uk.reuters.com.

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