The winning bidder to connect Northern Territory gas producers to eastern markets has proposed a link that runs between Mount Isa and Tennant Creek – the same start and end points proposed under a $6 million study for a new rail line.
NT chief minister Adam Giles on Tuesday announced energy and water asset owner Jemena had won the $800 million contract to build the 622 kilometre North East Gas Interconnector (NEGI) Pipeline, between Tennant Creek in the NT, and Mount Isa in Queensland.
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“This nation-building project will generate investment in regional infrastructure and deliver real jobs with no financial commitment from taxpayers,” the chief minister said.
“This is a great outcome and shows Governments can deliver major infrastructure projects through a robust competitive process.”
Giles said the market had responded extremely positively to the challenge issued by his government to connect the NT to the eastern markets, a move Giles said was “another step to a truly national gas grid”.
“Since I launched the process in Alice Springs at the end of October last year, the interest in and competition for the pipeline has been strong,” Giles continued.
“The level of interest from international and domestic pipeliners indicates the government’s decision to conduct a competitive process was the right one.”
Australian Pipelines and Gas Association (APGA) chief executive Cheryl Cartwright welcomed the announcement.
“Since privatisation many years ago, no government funding has been required to build and operate this critical gas transmission infrastructure that provides as much energy to the economy as electricity infrastructure,” Cartwright said.
“This is clearly one of the major reasons for choosing the northern route for the pipeline.”
The four shortlisted proponents for the pipeline deal were evenly split between the west-east option to Mount Isa, and a north-south option to existing pipelines in South Australia, an option Cartwright says “was likely to require substantial government underwriting”.
Giles said Jemena’s proposal was compelling as it did not require government funding, and offered cheaper tariffs, cheaper gas processing costs and the option to increase the capacity of the pipeline prior to the laying of first pipe if market conditions supported increased capacity.
Proponents of a rail link between Tennant Creek and Mount Isa have suggested added value could be redeemed from the project by using the corridor for a pipeline, like the one to be built under the NEGI deal.
Jemena expects construction of its 14 inch pipeline to be completed by 2018. Managing director Paul Adams said the pipeline would fast-track development of the NT’s gas industry.
“Building the NEGI will drive commercial exploration and development of currently untapped gas reserves, unlocking the next phase of economic growth for the Territory and helping build a stronger Northern Australia,” Adams said.
“The pipeline is cost-effective and relatively quick to build, so it will support a strong gas industry for the Territory by getting gas to market at a competitive price, accelerating development of NT gas fields and helping create jobs and opportunities in the gas industry.
“As further reserves in the NT are proved up, we can expand our scalable pipeline to meet strong demand from east coast customers.”
Adams said the Mount Isa route provided the most efficient way to get gas to the east coast.
“As soon as sufficient gas is proven in the NT, Jemena will seek to build a further link connecting Mt Isa to the Wallumbilla hub in Queensland,” he continued.
“This will vastly improve the reliability of the gas transmission network by reducing sole reliance on Moomba as the hub for supplies. It will also introduce some much-needed competition into the east coast market, while accelerating the growth of the NT gas sector.”
