Sunday, August 3, 2008

Update on Varanus Island

In a previous post ("Answers from Alloy Steel's CFO") among the questions answered by Alan Winduss, the CFO of Alloy Steel International (OTCBB: AYSI.OB) was this one,

Have you been materially affected, or do you anticipate being materially affected by the reduced natural gas supply as a result of the Varanus Island explosion earlier this month?

The Varanus Island plant provided 30% of Western Australia's natural gas, and the supply disruption resulting from the explosion has, according to Perth Now caused some mining companies (Alloy Steel's clients) to suspend some operations or resort to more expensive diesel to run their generators.

This was Mr. Winduss's response,

We expect to experience a slow down in orders from some mining companies effected by the gas shortage; however the timing of this cannot be determined.

Perth Now reported some positive news on this Friday ("Gas supply repairs ahead of schedule"):

US-based Apache Energy said today that output of 110 terajoules a day would resume next week, slightly ahead of schedule, following the June 3 explosion.

Full production is not expected to be restored until the end of the year.

On June 23, Apache said it hoped to bring on partial production of 200 terajoules by August 15 and full production of 350 terajoules by December.

It said the schedule was now 240 terajoules a day within a few weeks and full production by the end of the year.


WA Premier Alan Carpenter welcomed the news the Varanus plant would be back in operation ahead of schedule, but said it did not mean the situation was resolved.

``Having 80 terajoules in that pipeline by Tuesday next week and 110 by the end of the week ... means of course that a very much improved situation is sitting out there in front of us,'' he said.

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