$1 billion gas plant

Origin Energy Ltd is one step closer to the development of a $1 billion gas-fired power station in south-west Victoria after winning state government endorsement for the project.

The government recently signed off on an environmental assessment of the project, clearing the way for Origin to seek final approvals including a works approval, planning scheme amendment and pipeline permit.

The 1000 megawatt plant, near Mortlake, would provide base-load power to meet growing demand in the region and could boost the state's electricity capacity by up to 12%. It could produce enough power to supply electricity to 1.5 million homes, bolstering the security of Victoria's energy supply well into the next decade.

The project has the potential to add hundreds of millions of dollars to the Victorian economy and create up to 400 construction jobs.

Origin says the project does not depend on whether or not Alcoa decides to go ahead with the expansion of its nearby Portland aluminium smelter. The company's board is yet to give the project final approval, but that decision is expected later this year and if all goes to plan construction could start in late 2007 and production in 2009.

Gas for the power station would come from the $1 billion offshore Otway gas joint venture which is operated by Woodside Petroleum. Origin has the rights to about 50% of the gas from the joint venture and plans to build a 78 kilometre pipeline to transport the gas from Port Campbell to the power station. First gas is expected from the joint venture later this year.