Origin Energy announced its decision to proceed with the construction of a 630MW gas-fired power station near Braemar in the Darling Downs region of Queensland.

The Darling Downs Power Station will be the biggest combined cycle power station in Australia, producing enough power to supply the equivalent of 400,000 Queensland homes.

Origin today completed the contract documents worth $780 million with selected contractors GE and CH2M Hill to construct the power station.

GE will supply three Frame 9E gas turbines with a capacity of 120MW each, three boilers and a steam turbine of 270MW capacity. CH2M Hill will undertake engineering and construction activities and supply of the balance of the plant. All regulatory approvals are in place.

The power station project will directly employ an average of 300 people during the construction phase and up to 25 people once fully operational.

Construction is expected to begin in August 2007, with commissioning to occur in the fourth quarter of 2009 and ramping up to full commercial operation in the first quarter of 2010.

When fully operational the power station will consume up to 44PJ of gas per year.

The gas will be sourced from Origin’s extensive coal seam gas reserves at Spring Gully and the Walloons. The development of these fields, associated pipeline infrastructure and other project costs will be about $500 million.

This stage of the development will directly employ an average of 140 people during the construction phase and up to 30 people once fully operational.

Origin’s Managing Director Grant King said this development will result in one of the most competitive power stations in the National Electricity Market because of:

• Origin’s direct ownership of coal seam gas reserves that will fuel the power station;

• A competitive site location, which was purchased as part of the Sun Retail acquisition; and,

• A low life cycle cost for the power station, which includes construction and long-term maintenance costs.

“This power station complements our peaking power stations at Roma (80MW) and Mt Stuart (288MW) and off-take rights from the Braemar peaking power station (450MW), creating a diverse and competitive generation portfolio that supports our existing electricity retail business in Queensland,” he said.

“The combined investment of $500 million to complete the Spring Gully development, start the coal seam gas development in the Walloon and construct the connecting infrastructure will see these field’s long term production optimised.

Mr King added: “We are proud that Origin’s business strategy as a fuel integrated, generator and retailer is helping deliver a sustainable energy future for Queensland.

“The power station will be able to operate from intermediate to full base load capacity, and it will emit about half the greenhouse gas emissions that a coal-fired power station using current technology would create. This will save 2.5 million tonnes of greenhouse gases a year – the equivalent of taking 600,000 cars a year off the road.

“Because it is an air cooled power station, it will use less than 3 per cent of the water a conventional water cooled coal-fired power station would use, or about 200 ML versus 8000 ML a year.”

“In making this commitment to proceed, Origin appreciates the support given by the local councils and State Government in securing all of the necessary regulatory approvals in a timely manner,” he said.

Furthermore, Premier Peter Beattie’s Climate Smart 2050 Policy announced last week has provided a stable, long term framework for investment in this project and the future development of the gas industry in Queensland.

The project will be financed over the two to three year construction period from a combination of cash flow generated from Origin’s existing businesses and existing and new financing facilities.