Gas imports to relieve Australia’s energy crisis could arrive sooner -

The hand-picked boss of billionaire Andrew Forrest’s Squadron Energy will have his work cut out bringing down energy prices.

Eric Johnston
Associate Editor
July 24, 2024 - 8:58PM
The Australian Business Network

Andrew Forrest’s Squadron energy could be importing gas into Australia through Port Kembla before the planned 2026 start date.

The hand-picked boss of billionaire Andrew Forrest’s Squadron Energy will certainly have his work cut out.

Energy market veteran Rob Wheals took charge of Forrest’s large-scale green energy venture just three months ago with the mandate to deliver projects with a commercial eye.

The green-energy business is being built from the ground up. It sits outside Forrest’s Fortescue and is owned by the private investment arm of the Forrest family’s Tattarang group.

And while Fortescue has grabbed the green-hydrogen headlines, Squadron has kept a lower profile.

First up for Wheals is the long-mooted Port Kembla LNG import terminal, which has been three years in the making. On internal measures, Squadron is targeting first gas to flow into a very tight Australian market from June 2026.

Rob Wheals joined Squadron energy just a few months ago.  After 14 years at pipeline operator APA and three years as chief executive until 2022, Wheals knows the nation’s eastern seaboard gas network inside out.

The technical aspects and physical structure of the Port Kembla import terminal in NSW are almost complete, and Wheals is understood to be prepared to bring the import date forward from the second half of next year if the gas crisis escalates and there is a need for it in the market.

He is across the capacity constraints, particularly when it comes to the pipe dream of shipping surplus Queensland gas through the two-way transmission pipeline connecting into the Moomba Hub and then on to the southern states.

Squadron’s $300m import terminal means that gas potentially from anywhere in the world – including Australia’s North West Shelf – could flow into the eastern seaboard market just as the energy regulator has warned of the prospect of peak-day shortfalls from winter next year and an ongoing supply gap from 2028.

Ironically, the gas strains across southern Australia are set to coincide with a forecast surplus in global gas production.

Gas is going to be in greater demand as more renewables come into the market. Its role is providing fast firming capacity as more of the ageing coal-fired plants are phased out.

Still, Wheals’ first big challenge has been to find customers for the 130PJ facility, with big players such as Origin and AGL showing lukewarm interest.

This is of little consequence as it seems Squadron is preparing to take on the bulk of the gas coming through Port Kembla so it can underwrite its renewables ambitions through firming.

This is an important piece of the puzzle to get Squadron moving, as well as what sort of business it wants to become: a builder and long-term operator of low-cost green electricity assets.

Squadron currently operates five commercial wind farms across NSW and Victoria with 1GW of output. It has a more ambitious project slate, including a gas-fired power station in Dubbo to underpin its plans for more than 10 wind farms, four solar projects and several big batteries.

Other near-term projects in front of Wheals include an ambitious build of nearly 1GW of wind power near Mackay, backed by offtake agreements with the Queensland government. If all the projects move ahead as planned, Squadron will emerge as a key player in Australia’s renewables energy market. And it will also be one with a gas firming option.

Wheals has been told to bring commercial discipline to Squadron’s projects, including pushing down construction costs, and he wants to run them with APA-style infrastructure returns.

This ultimately makes them attractive to outside investors – although Forrest is believed to have told him he intends to keep operational control.

Forrest’s Fortescue last week outlined 700 jobs cuts and a delayed pathway into green hydrogen. And the pressure is on Squadron more than ever to make a difference by bringing down power costs. This will help Forrest crack the code to produce green hydrogen in commercial volumes.

It means Wheals, who spent a career piping gas around the country, could be the first to show Australia is a major gas importer.