NEWS FEATURE 41

FRIDAY OCTOBER 30 2015

Pipeline gaining momentum

Michael Gorey
ANALYSIS
THE Northern Territory Government is
expected to announce the successful bidder for
the North East Gas Interconnector within
several weeks.
The interconnector is a proposed pipeline
which will link onshore gas production fields in
Central Australia with the eastern states.
Gas has been produced in Central Australia
since the 1960s and the potential for expansion
is clearly evident. Whats lacking is a means of
transmission to market.
In 1986, a pipeline was completed from Alice
Springs to Darwin, meaning urban centres in
the Territory now receive most of their electricity from gas-fuelled power stations.
The 1500km pipeline from Palm Valley to
Darwin was a significant engineering achievement and shows it is no pipe dream to build over
a shorter distance to create a national network.
In October last year, the NT Government
launched a competitive process seeking privatesector proposals for the development of a pipeline connecting northern and eastern Australia.
If it goes ahead, the pipeline will enable
untapped gas resources to be developed
commercialising the industry in Central
Australia on a much bigger scale.
The incentive for development is to meet
anticipated demand in eastern Australia,
particularly Sydney.
There are different views in the energy
industry and among academics on how much
gas is needed.
In April, the independent Australian Energy
Market Operator released a report predicting
no gaps in short-term supply before 2019
due to a 17 per cent decline in the 2019 forecast
for industrial, residential and commercial
gas consumption.

Its going to
be interesting
times for a
known oil and
gas province
thats been
stillborn.
RICHARD COTTEE

The report was criticised by energy economics group EnergyQuest, which accused AEMO
of making erroneous estimates.
Small changes in assumptions can radically
change the outlook, EnergyQuest chief executive Graeme Bethune said. In effect, the AEMO
report assumes away the shortage that it was
predicting only two years ago.
A few weeks later, Australian Industry Group
chief Innes Willox warned of a looming shortage of gas in NSW next winter and in 2017 could
cause manufacturers to temporarily shut down.
Regardless of who is right, its inconceivable
anyone would want to build the Territory
pipeline if they didnt believe it was
commercially viable.
The NT Government has said it wont be putting any money into the project, meaning it
must stand on its merit or rely on the Commonwealth to assist with underwriting, direct
infrastructure capital or a concessional loan.
The four proponents are huge players: APA
Group, DUET, China National Petroleum

Corporation and Jemena. APA Group and Jemena favour the shorter Tennant Creek to Mount
Isa route, while CNPC and DUET prefer the
Alice Springs to Moomba option.
Its understood no government assistance
would be required to build via Queensland,
which is less expensive.
Gas producer Central Petroleum favours
Moomba because its the more direct route to
Sydney and tariffs would be less.
The company might also have an eye on developing highly prospective gas fields on the
NT-SA border.
South Australias Labor Mining Minister
Tom Koutsantonis upped the ante this week,
publicly endorsing the Moomba option.
By directing gas through Moomba, rather
than Mount Isa, suppliers will be able to access
the existing infrastructure within the Cooper
Basin and connect more efficiently and directly
to the markets in eastern Australia, Mr Koutsantonis said.
Central Petroleums managing director

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Richard Cottee (pictured) also believes the economics of heading south are stronger.
There is one particular view that if you increase throughput on day one, in two or three
years hence the tariff will decrease with
increased supply, which gives an exploration incentive to increase supply, he said recently.
Its a win-win. If were able to achieve that
target and I think we will, then Moomba becomes the cheapest route.
The fact state governments and large corporations are speaking publicly about these issues
confirms the stakes are high.
The normally bullish Territory Chief Minister Adam Giles has gone to ground, declining
to comment for probity reasons while the bids
are assessed.
For Alice Springs, the socio-economic benefits are potentially huge, whichever way the
pipeline goes. The advantage via Moomba is
that Alice would be the construction hub
and local contractors are more likely to
gain employment.
Meanwhile, environmental advocates are
sceptical. They dont necessarily oppose the
pipeline, which will leave a smaller footprint
than road or rail corridors, but fear it will open
the door for fracking.
Some say there should be investment instead
in developing solar energy in Central Australia
and connecting to the national grid. That idea
may have merit and many people are watching
a similar project in Morocco with interest.
However, in the short term, gas is relatively
cheap to produce, lower in emissions than coal
and easily stored to meet peaks in demand.
Mr Cottee told the Centralian Advocate last
week the pipeline is something the Territory
could truly gain from.
Its going to be very interesting times for a
known oil and gas province thats been stillborn
because of lack of markets, he said.

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