1. Confidential Rachael Smith – Gas Speak 2015 www.dbp.net.au Rachael Smith – Gas Speak 2015 www.dbp.net.au

2. Confidential MISCONNECTIONS AND OPPORTUNTIES  High gas prices  Lack of competition  Lack of access to infrastructure  High cost of projects (particularly labour)  What does Western Australia Gas look like now?

3. Confidential DAMPIER TO BUNBURY NATURAL GAS PIPELINE  Commissioned by the WA government in 1984, privatized in 1998 and purchased by DBP in 2004  Only pipeline connecting significant gas resources in Carnarvon Basin 1 (part of the North West Shelf) with customers in Perth and surrounding regions  Valued at $3.5 billion  Long term remaining asset life (~ 50 years) INDIAN OCEAN DAMPIER PERTH BUNBURY DBNGP Resource Mining Carnarvon Basin Gas Fields Population and Industry Resource Mining AUSTRALIA North West Shelf The DBNGP is essential infrastructure for Western Australia 4

4. Confidential 809 TJ full haul January 28 th 2015 and a total of 1,154 TJ’s delivered across the pipeline This was due to  Coal outages  40+ degree day  Cloud cover  No wind A perfect day for gas use RECORD THROUGHPUT

5. Confidential MARKET OVERVIEW  11 T1 Full Haul Shippers  94% of T1 used in gas retail, alumina or electricity production; balance for processing and mining;  Part Haul – 95% used in mining, or electricity. 5% to Mondarra.  Back Haul – 83% for chemicals/fertiliser, balance for mining and electricity.

6. Confidential WA GAS - PIPELINES https://gbb.imowa.com.au/#home

7. Confidential WA GAS - PIPELINES NameNameplate Capacity (TJ/d) StatusCovered?Owner DBNGP845 (full haul)Operational since 1984 Yes- tariff dictated by ERA DBNGP Transmission Parmelia65Operational since 1971 NoAPA Group Goldfields Gas Pipeline 202.5Operational since 1995 Yes and NoAPA Group Pilbara Extension Pipeline 166Operational since 1995 NoAPA Group Midwest Pipeline 10.6Operational since 1999 NoAPA Group Telfer Gas Pipeline 29Operational since 2004 NoAPA Group Kalgoorlie to Kambalda Pipeline 29.3Operational since 1999 NoAPA Group Kambalda to Esperance Pipeline 6Operational since 2004 NoAPA Group Fortescue River Gas Pipeline 64Operational since 2015 NoDBP Development Group

8. Confidential WA GAS - PRODUCTION FACILITIES NameNameplate Capacity (TJ/d) Marketing arrangement StatusPipeline Access NWSG630Joint till 2016 then separate (6 sellers) Operational since 1984 DNBGP/PEPL Varanus Island 270Joint and separate marketing (2 sellers) Operational since 1993 DBNGP/GGP Devil Creek220Joint marketingOperational since 2011 DBNGP Macedon200Separate marketing (2 sellers) Operational since 2013 DBNGP Red Gully10One sellerOperational since 2013 DBNGP Dongara7One sellerOperational since 1971 Parmelia Behara Springs 19.6One SellerOperational since 1992 Parmelia Gorgon182Joint and separate (7 sellers) Commissioning (due 31 Dec 2015) DBNGP Wheatstone200Separate marketing (7 sellers) In construction (due 2017) DBNGP

9. Confidential WA GAS SUPPLY/DEMAND http://www.imowa.com.au/docs/default-source/publications-and- reporting/GSOO/2014-gas-statement-of-opportunities.pdf?sfvrsn=0

10. Confidential GAS PRICING IN WESTERN AUSTRALIA  In WA there is no spot trading market such as the AEMO Short Term Trading Market  The Independent Market Operator runs the Gas Bulletin Board (manages the data of gas flows, production and consumption) but is not involved in the trading of gas.  Gas is predominantly sold via bilateral contracts  There is a small secondary market that is facilitated by companies such as Energy Access Australia and Gas Trading.  Historically gas consumers over contracted  Consumers are now looking to contract firm for partial requirement and buy in the secondary spot market due to lucrative short term gas prices.

11. Confidential GAS PRICES- HISTORY http://www.gastrading.com.au/spot-market/historical-prices-and- volume.html

12. Confidential ACCESS AND COST OF LABOUR  In the past WA has had high average wages due to the “mining boom” and large development projects in the North West  Seen an influx of workers from east coast and overseas to fulfil labour shortages. Extensive use of 457 visa’s. However since 2012 we have seen this slow down.  The fall in the commodity markets has also seen the average wages drop. Evidently seen by the CFMEU in April 2014 when they agreed to a drop across the base wages for works under their EBA. It saw a negotiation of around 9-11% reduction of the base hourly rates for the 2014-2017 EBA. http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6302.0Nov%202014?OpenDocument

13. Confidential ItemPerthMelbourneSydneyBrisbane Pint of Beer (from store) $4.43$4.31$4.70$3.90 Utilities (power, gas, heating -2pax) $307 per month$285 per month$200 per month$194 per month Housing (rent for 85m2 in expensive area) $2,773 per month$2,728 per month$3,466 per month$3,090 per month Monthly ticket public transport $104$140$126$167 Dinner for two a local restaurant $63$53$43$49 Cappuccino in the city $5.00$4.01$4.17$4.37 Beer at the pub$10$9$7$8 Average Commute Time 27 mins32 Mins35 mins29 mins Distance to the beach (CBD) 8 km (City Beach) 15 mins drive 9km (St Kilda) 25 mins 10km (Bondi) 30 mins drive 35km (Redcliffe) 40 mins drive Weather (Average)High 23.3 Low 13.3 8.1 hours of sunlight 131 sunny days p.a High 19.8 Low 10.1 5.6 hours of sunlight 49 Sunny days p.a High 21.6 Low 13.7 6.8 hours of sunlight 102 sunny days p.a High 25.5 Low 15.7 7.5 hours of sunlight 40 sunny days p.a http://www.expatistan.com/cost-of-living http://www.gungahlinweather.com/articles/greatweatherdebate.htm WESTERN AUSTRALIA- A SNAPSHOT

14. Confidential TO CLOSE OUT…….  WA has a well established gas market with over 30 years of operation  Multiple sellers in the supply market (2 in 2010 and by the end of 2016 there will be 7 production facilities and 26 sellers)  Gas prices have moved down considerably and we are looking at $4 for medium (5 year term) gas  Access to infrastructure- main pipelines have available capacity and more flexible terms. New pipelines have been built that open access to the Pilbara and Goldfields  Cost of investment is down, with labour being a large proponent of this.