About the project
What is being proposed?
Vopak’s Victoria Energy Terminal is assessing the feasibility of developing a floating storage and regasification unit (FSRU) based import terminal in Port Phillip Bay at an existing anchorage point, approximately 10 kilometres from the closest western shoreline near to Avalon.
The Project proposes to import liquefied natural gas (LNG) to help address the potential gas shortage expected in the mid to late 2020s, and to assist in securing Victoria’s energy supply as it transitions to a renewable energy future.
Why do we need the project?
Victoria uses approximately 45 per cent of the total east coast demand for gas. The Australian Energy Market Operator (AEMO) has forecast a structural gas shortage in Victoria by 2028 due to an expected 35 per cent drop in production from existing gas projects.
Renewables will in time bridge this gap, but until then the state needs a stable and reliable supply of gas. The FRSU will operate for a minimum of 10 years to support the state’s transition to renewables.
Why Port Phillip Bay?
Port Phillip Bay has been identified as the preferred location because it appropriately balances environment, marine and social amenity considerations, and will bring minimal disruption to normal bay activities, including shipping movements.
The bay provides optimal met-ocean (combined wind, wave and climate) conditions compared with Bass Strait, and relative ease of access to the existing pipeline infrastructure connected to the Victorian Transmission System.
When will the project start?
The project is anticipated to be operational from 2028.
How long will it run for?
The FRSU will run for a minimum of 10 years to support the state’s transition to renewables.
Project benefits
What is the advantage for Victoria and the community of this facility?
It will provide access to gas to Victorian industry, businesses and households during a predicted acute shortage beginning in the next three – five years. At the same time, it has the potential to maintain a competitive gas supply from other Australian or international LNG sources.
Vopak’s Victoria Energy Terminal project will be able to accommodate the supply of gas to meet variable demand through the volume it imports, or by storing LNG onboard the FSRU and an industry standard ship arrival schedule. The Vopak business model of “open access” will support multiple users providing competition for gas in the state.
This commercial flexibility offers a vital advantage over single operator terminals.
Vopak will develop, own and operate the import terminal; it will not own or market gas; that will be undertaken by users of the terminal.
What are the benefits of this project?
The project will provide access to a competitive new source of natural gas for households, businesses and industries in Victoria and across south-eastern Australia. It will underpin energy supply security by providing access to a large international gas market to compliment local production in SE Australia as Victoria transitions to a renewable energy future.
The project will generate employment opportunities, both directly related to the construction and operation of the project, and indirectly through increased demand for goods and services - around 500 jobs during construction and approximately 80 jobs during the operational phase. Some expertise will be imported from overseas and interstate, but the majority will be employed locally in construction, maintenance, plumbing and electrical.
About the site
Where will the FSRU be moored?
The proposed mooring is approximately 19km offshore from North Avalon (50 kilometres south west of Melbourne) which minimises visual impacts on local residents and communities. The site has been selected to cause minimal disruption to normal bay activities especially recreational fishing and shipping access to the Port of Melbourne.
What are the advantages of this mooring site?
This site was found to strike a balance between the environment, marine life, and proximity to existing infrastructure and communities and to cause minimal disruption to marine activities, including shipping movements.
The terminal site's water depth of approximately 19m prevents requirements for dredging activities during construction or operations.
A subsea pipeline from the marine berth will meet the shore near Beach Road and continue to run underground for 9.5 kilometres through Melbourne Water farmland before connecting to existing gas pipeline infrastructure.
How was the site selected?
Vopak has spent considerable time investigating sites for a Victorian LNG import facility, taking into consideration safety and environmental impacts, met-ocean (combined wind, wave and climate) conditions, proximity to local gas infrastructure and potential impact on stakeholders.
We investigated four potential sites on the western side of Port Phillip Bay: Geelong Port, Avalon (North and South) and offshore of Point Cook.
A near-shore site at Geelong was seriously considered but dismissed, given the need for dredging for both the terminal location, the shipping channel to access Corio Bay, and the tight navigational and docking requirements. Any site offshore of the Victorian coast is prohibitive due to the severe sea state, significantly impeding operations.
Port Phillip Bay is a preferred location due to benign ocean conditions compared with Bass Strait and relative ease of access to the existing pipeline infrastructure connected to the Victorian Transmission System.
About the FSRU
What is a Floating Storage Regasification Unit (FSRU)?
An FSRU is a vessel moored offshore or near the shore that has an onboard regasification plant capable of returning Liquified Natural Gas (LNG) into gas and then supplying this gas via a pipeline into the local gas network. There are approximately 50 FSRUs operating globally.
How big is an FSRU?
It is equivalent in size to a large cruise liner. It can be up to 300 metres long, 45 metres wide, with a draft of 12.5 metres and storage of up to 170,000 m3 of LNG (equivalent to around a week of average winter gas demand in Victoria).
How does it work?
The FSRU will receive LNG from import carriers, re-gasify it in an onboard facility and supply the gas directly into the Victorian Transmission System (VTS) infrastructure. The terminal could import up to 50 LNG cargoes annually.
Vopak proposes to design, construct and operate the Project but will not have a commercial interest in the sale of gas or import of LNG. This model enables independent LNG suppliers or local market participants to operate through an ‘open access’ terminal, providing competition to importation of LNG through the Project’s infrastructure, LNG suppliers and downstream gas market participants, and the wider Victorian gas market and consumers.
Why a floating facility and not an onshore facility?
The advantage of an FSRU is that it offers the same processing capacity but avoids the impact and cost of building a large onshore facility. As soon as the FSRU is moored, it can be operational.
When the facility is no longer required the vessel departs and the community avoids the problem of redundant infrastructure and expensive site rehabilitation.
How many LNG supply tankers will visit the facility? How long will they stay and how large will they be?
It is estimated there will be 20 – 40 deliveries a year, depending on how domestic supply from existing fields declines over the next decade. Supply ships usually dock for 24 hours to unload the LNG. An LNG tanker can be up to 300 metres long - similar in size to the FSRU.
Environmental impact
How will the project mitigate environmental impacts?
Vopak has identified the mooring site approximately 19km offshore from Avalon North to minimise any potential environmental impacts. Importantly, no dredging is required for the development of the berth or channel approach. The location means there will be unconstrained marine navigation into Port Phillip Bay with benign met-ocean (combined wind, wave and climate) conditions.
The project will minimise and avoid the location of construction and infrastructure in areas of conservation at the Western Treatment Plant by using horizontal directional drilling for the shore crossing and pipeline, and choosing alignments that avoid impacts to habitat for threatened species.
We are carrying out a range of studies to inform the development of appropriate management plans, so that we can minimise and properly manage any potential environmental issues associated with the project.
The mooring of an FSRU in Port Phillip Bay and the associated infrastructure will be subject to strict environmental controls, including an Environmental Effects Statement (EES) to be administered by the Department of Transport and Planning (DTP).
We are aware of a bird sanctuary to the south of the project and a marine farm bordering the pipeline and will work with those involved in these areas to mitigate any potential impact.
What is the environmental footprint of the facility?
The proposed import terminal project has a lower environmental footprint than large pipeline expansion projects to bring gas from northern Australia.
The Project will utilise shore power to operate the FSRU which results in the lowest possible facility emissions.
Safety
This will be Australia’s first FSRU. How many exist overseas and what is their safety record?
There are approximately 50 FRSUs currently operating internationally, with another 3 under construction. Operating FSRUs enjoy an excellent safety record, with no major incidents recorded since the first FSRU commenced operations in 2008.
LNG shipping also has an excellent safety record, with a fleet size of over 770 vessels and 100,000 ship movements being conducted without incident.
What is Vopak’s record with FSRUs?
Vopak is regarded as one of the leading energy infrastructure companies globally and currently, in partnership, operates five LNG import terminals, three of which are FSRUs. Vopaks experience and expertise have been critical during investigations into developing the Project in Port Phillip Bay.
Vopak, along with consortium partners, was recently awarded by the South African Government the right to design, build, and operate an import terminal in Richards Bay.
Is there a risk of spillage or accident during loading, unloading or storage?
The LNG sector has a proud safety record regarding spillage or loss during storage. LNG tankers and modern FRSUs are constructed with safety as a priority, being twin-hulled, heavily insulated and featuring 4-6 separate storage tanks. LNG is a colourless and odourless liquid. If accidentally spilled it quickly evaporates.
Safety studies are being conducted in collaboration with authorities to ensure best-practice construction and operational risk management.
How many LNG supply tankers will visit the facility? How long will they stay and how large will they be?
It is estimated there will be 20 – 40 deliveries a year, depending on how domestic supply from existing fields declines over the next decade. Supply ships usually dock for 24 hours to unload the LNG cargo. The LNG carriers are powered by the LNG they are carrying, making them extremely environmentally effective.
Who is Vopak?
Vopak is a global leader of energy infrastructure. It is part of Royal Vopak, a Dutch group which operates 73 terminals across 23 countries including all major trade routes. Vopak’s terminals store products vital for everyday life. Oil, gases, biofuels and edible oils that allow people to cook, heat or cool their homes and commute to work, and chemicals that enable companies to manufacture millions of useful products.
Vopak is also developing new infrastructure solutions to facilitate the introduction of future vital products, focusing on low-carbon and renewable hydrogen, CO2, flow batteries and sustainable feedstocks. They have been operating globally for over 400 years.