Energy Consulting

Energy is critical to WA’s economy. Abundant reserves of fossil fuels provide reliable and cost effective energy to sustain and develop a broad range of industries – with potential to unlock further Downstream Development in the future. (DMIRS quick fact exports)

At the same time, WA also has exceptional renewable resources, supporting an accelerating growth in Renewable Electricity Generation. Options for renewable energy storage will hold the key to reliability in a clean and green energy future. Government policy and will continue to stimulate sustainable energy options.

In this context, identifying the best long term energy solution for your business is a challenging process. Cost and reliability are first order considerations – economic viability and continuity of operations. But then how to overlay sustainability, efficiency and regulatory outcomes to optimise the outcome?

The Energy Supply Chain

At BrightSource Consulting, we take years of experience in all areas of the Energy Supply Chain, in Western Australia, and apply that knowledge to your specific circumstances. Some key areas of expertise are;

Optimising Energy Supply Arrangements for New Projects at Feasibility Stage of Development

BrightSource Energy and associates worked with a client on a feasibility study for power options for a new Multi-product Mining Operation in the mid-west of WA. Options that assessed cost and reliability included stand-alone generation (diesel or gas) or connection to the grid (SWIS). Further optimisation to include sustainability and consideration of regulatory requirements identified a combined stand-alone Gas Generation Option (via LNG) met cost and reliability requirements while also creating the opportunity for development of renewable generation (solar PV). While the combined capital cost of gas and renewable generation was a significant initial investment, real savings in fuel supply could be achieved over the life of the Project.

Revising and Restructuring Energy Supply Arrangements for Expanding Projects
The principal of BrightSource has many years of experience in developing energy supply infrastructure to improve energy cost outcomes for clients. This included commercialising the 290KM Eastern Goldfields Pipeline for the APA group. This new pipeline was key to the expansion and sustainable development of gold operations in the Great Victoria Desert. Energy supply at the time was combined diesel and LNG both delivered by truck. An expansion of operations (and mine life) was key to developing a pipeline gas solution across two operating mines, reducing costs and emissions while improving reliability of energy delivery.
Implementing Complementary Energy Management Strategies for Existing Operations
The principle of BrightSource lead the commercialisation of the Mondarra Underground Gas Storage Project in WA. The key to this development was solving the incremental cost-to-value-created equation to support the long-term commitment to storage services by the key customer. The solution combined the value of flexible energy delivery to meet fluctuating market demand, with incremental large scale gas reserves (in addition to contract) to ensure reliability of supply. There are new two operating gas storage facilities in WA – each offering different ‘products’ and associated costs. BrightSource can assist businesses create value from energy storage to complement existing energy supply arrangements.

The Role of Gas

The critical element to the future Energy Supply Chain will be contracting Gas Supply Services. Unless you are connected, or could be connected to the SWIS, gas remains has the lowest emission fuel that will be necessary to provide a continuous energy / electricity supply to complement intermittent renewable Energy Sources.

And this is where BrightSource Consulting offers a unique set of skills and experience.

With Senior Executive experience in Upstream Gas Supply; Gas Transportation; Gas Storage and Distribution; and conversion of gas to Electricity Generation, BrightSource can offer an end-to-end Energy Consulting Service. BrightSource’s unique approach starts with clearly articulating a plan for the current and future energy requirements of clients. A detailed Gas Industry Network and knowledge of Gas (and Related Infrastructure) Markets facilitates a thorough analysis of options that are likely to deliver the best overall deal (cost and reliability) that meets the client’s needs.

Optimal Gas Supply Option?

Infrastructure

Portfolio

Market

Pipeline or LNG?
Natural Gas is traditionally delivered by pipeline. The key advantage is long term reliability of energy supply. Economics will depend on the volume of gas required and the length of term the Buyer is able to contract for. The key disadvantage is lack of flexibility -costs are mostly fixed regardless of demand shape across the day or seasonally. LNG is both reliable and flexible, but more costly to deliver. It’s main advantage is for smaller loads and / or shorter term of contract.
Storage
Storage of natural gas is a key consideration in defining a gas contract profile. By using stored gas to meet extreme demand periods, or storing excess gas during long shutdowns of operations, storage optimises the contracted supply commitment. It also enables a portfolio approach to gas supply by taking advantage of procuring less expensive spot market gas for future use, or by swaps or other market mechanisms to optimise price and consumption.
Firm / Interruptible Transport
Gas Transport has traditionally been contracted on a firm basis. That is, the pipeline operator has an obligation to deliver (or pay costs), and the gas buyer has an obligation to pay (even if they don’t use the service). More recently buyers have made use of interruptible gas transport services that are pay as you use. The disadvantage is the tariff is usually higher and the pipeline operator can curtail the service without penalty (assuming there is an operational reason to do so. Deciding on the best approach depends on each buyers circumstances, alternatives and access to back up power.
Short or long term?
Deciding on a long or short term gas contract is a key decision. A more detailed discussion is contained on the blog page here.
One supplier or multiple?
The obvious advantage of multiple gas supply contracts is the portfolio effect of reduced risk of loss of all gas supply. Loss of supply across multiple suppliers is more unlikely, and if one supplier is interrupted, pre-existing arrangements with other suppliers can expediate replacement supply. But the additional administrative costs need to be considered, as does the possible opportunity cost of contracting the entire volume with one supplier for a lower gas price than two or more tranches across multiple suppliers.
Contracted (volume commitment) or spot (traded) gas?
As the gas market has matured, so has the emergence of short-term contracts (month to month) and spot gas sales (large users with excess gas). In the case of spot gas, price is usually attractive reflecting the ‘distressed’ nature of the gas and a forced sale to avoid the full liability of paying for gas not consumed. But gas suppliers are also making short term sales available to credit worthy buyers, with monthly prices usually lower than contract. So short term supply and spot gas can optimise gas supply costs.
Trading
Large gas consumers are becoming active in trading gas in the WA gas market. This is done bi-laterally as these large buyers develop relationships with each other and smaller consumers who benefit across the different downstream sectors. This is also enabled by the ability to trade gas transport among existing gas transport users. While trading is not a long term gas supply option, it can be sued effectively to better shape gas contracts where two buyers may have complementary seasonal demand profiles.
Swaps
The emergence of large-scale underground gas storage has also enabled a secondary market in gas swaps. These have been used effectively where two or more gas buyers have managed delays to contracted gas supply, or where a gas buyer’s demand has been significantly interrupted or delayed. A consideration at the time of gas contracting is managing the risks of late (or early) supply and how that risk can be mitigated through gas swaps.
Price
Gas prices are primarily determined by the balance between demand and supply of gas. As gas supply is usually contracted months or years in advance, price (for suppliers) turns on the expected demand / supply balance at the time supply commences. For this reason, it’s critical for gas buyers to have a good understanding of the future gas market, in the short and medium term to inform timing of contracting gas supply.

Gas has a key role in supporting more sustainable (renewable) energy solutions. The intermittent nature of these solutions means gas has to also take on an intermittent support tole – to fill the energy gaps. And while fuel savings (the gas commodity) will be apparent, gas transport, storage and distribution are all fixed costs which still need to be recovered. BrightSource Consulting can define, assess and minimize these costs to assist clients optimise cost, reliability and sustainability outcomes.