Western Australia, the country's top mining state, lost a third of its gas supplies on Wednesday after a blast at a gas distribution plant operated by Apache, forcing customers to curb usage to maintain production runs.

The biggest buyers of Apache's gas, including Rio Tinto Ltd/Plc, BHP Billiton Ltd/Plc and Alcoa Inc, said they were so far keeping up with production by conserving their own gas inventories and in some cases switching to diesel.

The gas was cut off after the explosion late on Tuesday at the Varanus Island gas processing plant operated by Apache Energy, a unit of U.S-based Apache Corp, ruptured two gas pipelines transporting gas from offshore fields to the plant.

Apache has since declared force majeure on supplies of gas to customers, Tim Wall, Apache Energy's managing director, told reporters, adding there were no injuries and workers had been evacuated safely from the island.

A small fire was still burning at the facility and it would be several days before a clear picture of damage emerged, Wall said.

Once you find the pipe you can get a repair fairly quickly I would think, but we have to get in and make sure there is no other damage, he said.

Western Australia state is one of the world's biggest suppliers of iron ore, gold, nickel and alumina, much fed to burgeoning Asian industrial and consumer markets.

Wall added that residential gas supplier Alinta had asked its customers in the southwestern part of the state to conserve power usage, since it gets some gas from Apache, though 80-90 percent of Apache gas goes to industry.


BHP produces tens of millions of tonnes of iron ore and about 100,00 tonnes of nickel from mines in the state each year.

At this stage we're operating as normal. However, we'll continue to assess the situation as we get more information, a BHP Billiton spokeswoman said in an e-mail.

Alumina Ltd, which has three joint ventures producing alumina in Western Australia with Alcoa Inc, said the gas outage should not affect its output of 8 million tonnes a year.

Production hasn't been cut back, spokesman Ken Dean said.

The Alcoa World Alumina joint venture gets about 25 percent of its gas supply from the Varanus plant but can replace that by switching to diesel, he said.

It will have a marginal cost impact, because the cost of diesel is higher than for the contracted gas, said Dean.

Rio Tinto spokesman Gervase Greene said contingency plans to maintain operations at its iron ore mines, rail lines and port facilities had been activated.

Newcrest Mining Ltd said it was trying to minimise the impact on the power station for its giant Telfer gold and copper mine by drawing down diesel fuel stocks, but warned it only had limited diesel stocks on site.

Woodside Petroleum said it would try to help cover some of the shortfall.

About 330 million cubic feet of gas and 8,000 barrels of oil are typically produced daily at Varanus Island. Apache's share of the total is about 200 million cubic feet of gas and 5,000 barrels of oil.

The John Brookes field, owned by Apache and Santos Ltd has stopped production, Santos said.

Also, production at the Harriet field, owned by Apache, Tap Oil Ltd and Kuwait Foreign Petroleum Exploration Co was halted, said Tap Oil. (Additional reporting by Sonali Paul in MELBOURNE; Editing by Ramthan Hussain)

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