Article – NT to East Coast gas link proposal gains momentum

by 8 January 2015

Summer 2014/15
Gas Today

A gas pipeline linking the Northern Territory to the east coast gas market is now closer than ever after NSW and NT signed a memorandum of understanding to develop the pipeline. Gas Today spoke with NT Chief Minister Adam Giles about the proposed pipeline.

After having recently signed a memorandum of understanding (MOU) with the NSW Government, while also having been given the blessing of the Council of Australian Governments (COAG), the Northern Territory Government is determined to ensure a key piece of infrastructure in a national gas grid is a real possibility.

Potential routes

APA Group has flagged three potential routes for the potential pipeline, with the first being a 620 km pipeline from Tennant Creek, NT to Mt Isa, Queensland, and the second a 1,100 km pipeline from Alice Springs to the Santos-operated Moomba gas plant in South Australia.

A third 700 km pipeline connecting to the Carpentaria Gas Pipeline is also being investigated.

“With regards to the route, the potential Alice Springs pipeline to Moomba, I think, presents the best opportunities for domestic gas for the nation,” Mr Giles tells Gas Today.

“With regards to the proposed pipeline between Tennant Creek and Mt Isa, that also presents a good opportunity domestically, but also internationally, with potential links through to Gladstone.

“There may be people who come forward with other pipeline options. I know there have been other options discussed in the past about different routes.”

Industry involvement

Mr Giles says the project has already received a large amount of interest from the industry, including “a range of domestic, in terms of interstate and smaller operators; national, in terms of large pipeline operators; and international companies”.

Meanwhile, APA Group is undertaking its own feasibility studies with fly-overs for potential routes, along with evaluation of environmental considerations and project construction cost estimates underway.

“I think APA have obviously got a good head start, because they’ve already been having a look at it, spending a fair amount of money in doing the feasibility study and the action to try and get the pipeline into fruition, so in a lot of ways well ahead of the game on that front,” Mr Giles says.

“When the public process comes out they’ll be much more advanced than others.”

Additionally, APA Group Executive – Transmission Rob Wheals says a potential NT Link provides a number of benefits to various gas market stakeholders.

“By linking APA’s NT assets with our eastern Australian gas grid, it encourages exploration and production of new gas sources to meet growing demand,” Mr Wheals says.

“A 9,000 km seamless transport system between the Timor Sea, Bass Strait and Sydney would provide all stakeholders with flexibility and additional security of supply, especially over the coming years.”

As for funding the pipeline, Mr Giles says the aim for the pipeline is to be fully sustainable from the start.

“We want it to be a fully commercial model. We believe that the gas is out there and we want potential pipeline operators to be able to pool all that together.

“So when we say, no government money, what we’re talking about is we want the private sector to back it in.”

Where to from here

With an 18-month construction window in mind for the pipeline, the NT Government is pushing for the private sector to finalise the project as quickly as the possible, following an industry briefing in Alice Springs held in late October.

Mr Giles suggests that the pipeline would ideally be operational by 2018, in order to avert a gas supply shortage on the east coast.

“Fundamentally, NSW will start to come off in 2017, and if NSW are going to start doing CSG throughout western NSW obviously that will have a slight difference.

“But I’ve had a discussion with [NSW Premier] Mike Baird, who’s very keen to see the NT move to a position where we can start providing up to 40 per cent of their shortfall, so that provides me with a high level of reassurance that the NSW Government is definitely keen on trying to get some resolution to this.

“We also had the Prime Minister backing us through at COAG, and we’ve also got the support through that North Australia development agenda which we’re operating on.”

Federal Industry Minister Ian Macfarlane has also been a key supporter of the pipeline, commenting that interconnection is looking to be the only solution to the projected gas supply problem in New South Wales, with Mr Giles stating “the words of encouragement from Mr Macfarlane obviously puts us in a good position”.

A potential game changer

As the pipeline continues to gain momentum, Mr Giles says the project could provide a significant boost not only to the gas market on the east coast, but also to the economy in the north of the country.

“I do think it’s an opportunity for the NT to lift its weight, in terms of the nation, particularly in providing opportunities for the development of northern Australia which will mean a lot more to people in our more populated states, and particularly in NSW, so I think that’s an advantage.

“Also, it presents an opportunity to create somewhat of a domestic wholesale gas market that isn’t in the nation at present, and that can provide better price certainty for a lot of people, particularly those within the manufacturing industry who find it a challenge to be able to compete with the gas pricing ratios that are out there at the moment.”

Expressions of interest from the private sector for building and operating the pipeline opened on 13 November.

The approvals process will take place in the following 12 to 18 months.

For further information or to register to receive a copy of the EOI, visit nt.gov.au/gaspipeline

Courtesy of Gas Today

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