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## Newcastle Gas Storage Facility 

In New South Wales, AGL has proposed development of a gas storage facility near Newcastle. When complete, the facility is expected to have the capacity to store 1,500 TJ  of gas and provide a peaking supply of 120 TJ/day. The storage facility would allow AGL to meet its peak gas market requirements over winter and to provide additional security of gas supply if there are other circumstances which threaten the availability of gas supply to Sydney and Newcastle. 

The Department of Planning in New South Wales has found this project to be a Major Project subject to Part 3A of the Environmental Planning and Assessment Act. An Environmental Impact Assessment has been completed and made publicly available in July 2011. 

Subject to formal planning approval, AGL anticipates construction to commence later this year, with the facility to be operational by winter 2014. 

## The Camden Gas Project 

The Camden Gas Project is situated 65 kilometres south-west of Sydney and comprises the only commercially producing gas wells in New South Wales. Gas is produced from local coal seams. The gas production facility co-exists with other land uses, such as agricultural and residential housing developments. 

During the year, AGL commissioned a new state-of-the-art Ensign 67 rig which has drilled four wells since January. Toward the end of the year, AGL also placed a new service rig into operation, performing maintenance on six wells to improve production. 

## Other New South Wales Assets 

AGL also owns and operates other coal seam gas projects at Gloucester (PEL 285, located approximately 100 km north of Newcastle), and in the Hunter Valley (PELs 4 and 267). 

During the year, the Gloucester Gas Project received a concept plan approval and a Part 3A planning approval authorising: 

> stage 1 of the Gloucester gas field development, including 110 gas wells and associated infrastructure; 

> a central processing facility to treat gas and water; and 

> construction of a gas transmission pipeline between the central processing facility and the existing gas supply network at Hexham. 

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AGL intends to invest about $300 million in the project during the next five years. 

Subsequently, a local community action group has initiated a judicial review of the approvals in the New South Wales Land and Environment Court. The review process will take several months to run its course. In the meantime, AGL intends to continue preparatory activities in anticipation that final project approvals will ultimately be received. 

Over the last year, there has been a substantial increase in the level of media and community scrutiny of coal seam gas projects in both Queensland and New South Wales. Our exploration activities in the Hunter Valley have been the subject of a number of protest activities initiated by local residents concerned about whether our operations will harm the local environment. 

AGL has recently opened an Information Centre in Singleton to make available to the local community opportunities to learn more about AGL’s operations in the Hunter region and the steps we take to safeguard the health and wellbeing of the environment and the local residents. 

To date, AGL’s activities in the Hunter Valley have involved obtaining approximately 300 kilometres of seismic data, drilling 16 core holes and six stratigraphic holes, and the operation of two pilot test wells. The petroleum exploration phase of the Hunter Valley Gas Project is expected to continue for at least three to five years. 

## Increased gas reserves 

Upstream Gas continued to increase its gas reserves. For AGL’s customers, growth of reserves means security of supply. 

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*  Under a 50-year project agreement that commenced in 2000, AGL has no effective exploration rights (or ongoing cost obligations) within exploration tenement ATP 1103 as these were assigned to Arrow Energy Limited. However, AGL is entitled to participate up to a 50% interest in any commercial development by contributing its share of past costs. Past costs are anticipated to be less than $0.05/GJ. 

