A gas pipeline from the Northern Territory to Queensland will drive exploration for untapped gas fields and will contribute to the growth of northern Australia, the chief minister says.
Adam Giles announced on Tuesday that industrial fertiliser and explosives producer Incitec Pivot had signed a 10-year deal with PowerWater Corporation to provide it with the NT's excess gas, starting from 2018.
It is the largest consumer of industrial gas in eastern Australia.
The gas pipeline will be constructed by Jemena, which is owned by China's State Grid Corporation and Singapore Power, and which supplies the majority of gas in NSW.
The NT currently pays for gas it doesn't consume "so we're losing money each and every day", Mr Giles said.
'It is nation building'
The North East Gas Interconnector (NEGI) will also help stave off a looming energy crisis in the eastern states, he said.
"The pipeline itself is truly historic, it does cross borders, it is nation building, it adds to a national pipeline network," Mr Giles said.
"Particularly it helps continue and build jobs in Australia in the manufacturing industry ... there will be more jobs in exploration and development of gas fields, and our true vision, when it's finalised, will be a manufacturing industry in the NT creating both upstream and downstream jobs."
He said the increased revenue PowerWater Corporation would make from selling excess gas would lead to reduced electricity prices for Territorians.
A 622-kilometre pipeline
The 622 kilometre pipeline, which Jemena expects to complete in 2018, will run between Tennant Creek in the Northern Territory and Mount Isa in Queensland, a shorter and cheaper route than proposed by two of the other bidders.
The alternative, running south to the gas hub of Moomba, would have provided more connections to southeastern markets for the Northern Territory's 230 trillion cubic feet of onshore and offshore gas resources, but the northern route was more affordable and quicker to build.
"Going south just wouldn't have provided the same catalyst to fast track development of the NT's gas fields," Jemena Managing Director Paul Adams said in a statement.
The pipeline was cheered by manufacturers, who have long complained that Australia's major gas producers were going to drain the market of gas for their liquefied natural gas (LNG) export projects and have raised concern about a lack of competition among domestic gas suppliers.
"The NEGI (North East Gas Interconnector) will...increase gas supply to the east coast market where energy-intensive manufacturers are desperate for competitive supply options," Incitec Pivot Ltd Chief Executive James Fazzino said in an emailed statement.
Fertiliser and explosives maker Incitec, the biggest industrial gas consumer on the east coast, has already signed up as a customer for the pipeline, committing to buy gas from NT's Power and Water Corp for 10 years for a fertiliser plant in Queensland.
It also has a tentative agreement to buy gas from Central Petroleum, which expects to provide more than half of the pipeline's initial throughput.
Industry welcomes news
"The creation of a new market for onshore gas discovered in the Northern Territory is truly transformational for the Territory and Central Petroleum," Managing Director Richard Cottee said in a statement.
The Australian Petroleum Production & Exploration Association (APPEA) welcomed news of the project as nationally significant.
"By the time it is built, we are likely to see some tightening of supply on the east coast so the timing is very good," CEO Malcolm Roberts said.
"By stimulating gas exploration and production in remote areas of the NT it will help deliver tangible, long-term job opportunities in regional centres and indigenous communities."
Green groups concerned about seismic instability
But Green groups have rejected the pipeline, citing seismic instability in the Tennant Creek region and community concern around fracking.
"We've got family right through the pipeline area and up through the NT Gulf country, all who are going to be affected when this pipeline drives dangerous fracking gasfields across the Territory," said Gadrian Hoosan, a traditional owner from Borroloola.
Hydraulically fractured gas was expensive and risky, said Naomi Hogan of the Lock the Gate Alliance NT.
"This NEGI gas pipeline is nothing but a gas giveaway to wealthy overseas companies that want to frack our land and send our gas offshore," Ms Hogan said.
With an NT election due in August, the construction of the pipeline was far from guaranteed, she said.
The North East Gas Interconnector:
- 900 jobs will be created during the construction phase
- 600 jobs will be on the ground between Tennant Creek and Mount Isa, including 160 jobs for indigenous workers
- The pipeline will generate about 100 contracts worth $112 million for local businesses
- Jemena won the contract because it offered the lowest tariffs for piping the gas
- The pipeline can be scaled up from 14 inches to 18 or 20 if further gas reserves are uncovered before construction begins
- The NT government estimates the NT has more than 200 trillion cubic feet of gas, which could potentially power Australia for 200 years
- All royalties will go towards vocational education and training.
