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AGL Energy Limited 2
About AGL
AGL’s integrated business strategy
AGL’s integrated strategy provides access to multiple profit
pools and balances risk between upstream supply of energy and
customers’ demand for energy.
Upstream supply – renewable and thermal generation
Merchant Energy manages AGL’s power generation assets and
wholesale energy sourcing portfolio. Merchant Energy also manages
energy sales to AGL’s major customers and to other retailers, and
provides energy efficiency services.
AGL has a diverse power generation portfolio, including baseload,
intermediate and peaking generation plants spread across traditional
thermal (coal and gas) as well as renewable sources (including hydro,
wind, landfill gas and biomass). Renewable energy generation assets
comprise around 48% of AGL’s operated generation portfolio (by
installed capacity), or 25% of owned, operated or controlled assets.
The acquisition of Loy Lang A will reduce the proportion of AGL’s
renewable capacity to 27%. More information on AGL’s renewable
assets is available in the Climate Change chapter of this report.
Strategic direction:
AGL has a medium-term target of owning
and/or operating peak/intermediate generation to cover 80-120%
of flexible demand.
Upstream supply – gas production
Upstream Gas is responsible for managing the growth of AGL’s
upstream gas portfolio to secure long-term, sustainable and market
competitive gas supplies for customers and for power generation
AGL owns and/or operates coal seam gas exploration and production
projects in six petroleum basins across New South Wales and
Queensland. The investments that make up AGL’s upstream gas
portfolio include:
>> Camden Gas Project: 100% interest, operated by AGL;
>> Hunter Gas Project: 100% interest, operated by AGL;
>> Gloucester Gas Project: 100% interest, operated by AGL;
>> Galilee Gas Project: 50% joint venture interest, operated by AGL;
>> Silver Springs Project: 100% interest, operated by AGL;
>> Moranbah Gas Project: 50% joint venture interest, operated by
Arrow Energy;
>> Spring Gully Gas Project: 0.0375-0.75% joint venture interests,
operated by Origin Energy;
>> Diamantina Power Station: a 50% joint venture with APA Group
to construct a power station in the Mt Isa region;
>> CSM Energy: 35% equity stake in a private company aiming to
extract gas from mining operations and deliver it to market; and
>> New Zealand’s Taranaki Basin: various non-operated shareholdings
in exploration licences.
In Queensland, Upstream Gas manages the Silver Springs
Underground Gas Storage Project which uses a depleted reservoir in
the Surat Basin to store gas underground. In New South Wales, AGL
has now received appropriate approvals to begin construction on its
Newcastle Gas Storage Facility, an above ground, liquefied natural
gas facility that AGL will use to manage winter peak demand for gas
from 2015.
Upstream Gas also manages AGL’s 9.9% equity interest in Torrens
Energy Limited. AGL and Torrens Energy have entered into a
Geothermal Alliance Agreement to jointly commercialise baseload
geothermal projects close to the electricity transmission network.
Strategic direction:
AGL is targeting gas storage withdrawal
capacity of 250TJ/day, ownership of around 2,000 PJ of 2P
upstream gas reserves for domestic supply and gas production
that meets 40-50% of customer demand.
Transmission and distribution
Ownership of large-scale electricity or gas transmission and
distribution systems that are used to transport energy from
upstream supply facilities (gas production and electricity generation)
to the end customer is not core to AGL’s integrated strategy. AGL
does not own gas or electricity distribution networks or electricity
transmission networks, but does have some strategic investments in
gas transmission infrastructure, as outlined in the Economic chapter
of this report.
In FY2012, coinciding with AGL’s 175th year of operation, we have
been focussed on achieving our new vision of creating energy solutions
for the communities of today and tomorrow. In a year that has seen
widespread scrutiny of energy costs, the introduction of a price on carbon
and community concerns over power generation projects, AGL remains
committed to building a sustainable future for all of our stakeholders
– our customers, our employees, our investors, the community and
the environment