Development in the pipeline
A number of pipeline projects are progressing well in the region, with recently awarded contracts and ongoing construction a mark of the pipeline activity occurring in the Northern Territory.
Darwin pipeline construction awarded
In December 2014, Power and Water Corporation Northern Territory awarded McConnell Dowell a contract to design, procure, construct and commission metering skids and an interconnecting pipeline.
The 150 mm, 12 inch pipeline will transport gas between the existing Wickham Point Pipeline and the new INPEX Gas Plant in Darwin.
Design work commenced immediately, with commissioning scheduled to begin in September 2015.
The new pipeline will connect the Northern Territory grid to the under-construction INPEX-operated Ichthys Project, a 889 km, 1,070 mm offshore pipeline stretching to the Ichthys Gas Field in the Browse Basin.
NT-East Coast Pipeline bids being assessed
Nine responses have been submitted for development of the Northern Territory to Interconnect Gas Pipeline.
A Call for Expressions of Interest, which closed on 15 December 2014, resulted in the shortlisting of 11 companies who were invited to participate in the next stage of the bid process to win a potential $A800 million contract to build the Northern Territory to East Coast Gas Pipeline
Shortlisted companies were invited to submit a response to a Request for Initial Proposal, which recently closed on 2 March 2015.
Following this, nine responses will now be evaluated by an expert panel comprising of two private sector members and two senior public servants, with the government planning to identify the top five bids before engaging in a formal request for proposal process.
It is intended that a select number of proponents will be invited to progress to a Final Request for Proposal stage, which will close in September 2015, with a successful proponent being announced shortly thereafter.
The 11 companies that were invited to proceed to the formal Request for Initial Proposal stage were APA Group; Berkshire Hathaway Energy; DDG Operations (Duet); Enbridge International; GDF Suez; Macquarie Capital; Marubeni Corporation; Merlin Energy; OSD Midstream; Quanta Capital; SGSP (Australia) (Jemena).
In 2014, the Northern Territory Government granted Major Project Status to the proposed gas pipeline.
“The construction of this gas pipeline is an infrastructure project of national significance. It’s also a matter of urgency for the eastern states which are fast approaching an energy security crisis” Chief Minister Adam Giles said.
The gas pipeline connection from the Territory is designed to meet energy demands on the eastern seaboard and to contribute to national energy security.
NT Chief Minister Adam Giles told PPO News last year that APA was already more advanced than other possible developers, with a feasibility study well underway, and applications submitted for a pipeline survey licence.
Two main routes are being considered for the proposed pipeline, with one option being a 620 km pipeline from Tennant Creek to Mt Isa at an estimated cost of $A900 million.
Meanwhile, the second option involves a 1,000 km pipeline from Alice Springs to the Santos-operated Moomba gas plant in South Australia for approximately $A1.3 billion.
Dingo Gas Pipeline construction complete
Central Petroleum has announced construction on its Dingo Pipeline has been completed.
Hydro-testing on the pipeline was also recently undertaken, in preparation for commissioning.
The Dingo Project involves a 50 km (40 km composite, 10 km steel), 100 mm diameter sales gas pipeline running from the Dingo Gas Field to Brewer Estate in Alice Springs.
The project (including plant and pipeline construction) is running on time as well as being close to 10 per cent below the budget provided under the financing facility limits.
As a result, Central will retain more than $2.5 million in undrawn facilities which the company may be able to access.
Central Petroleum Managing Director Richard Cottee praised all those involved in the Project, which he sees as an important step forward for the Company.
“Given the remoteness of our operations and the present economic climate in which we operate, it is a real achievement to bring this company-critical project on time and substantially below the Macquarie Facility limits,” said Mr Cottee.
“The development of Dingo is an important milestone in the strategy of making Central a significant gas producer for the Australian domestic market which is substantially quarantined from oil price fluctuations.”
The progress on the pipeline represents a major step forward for Central Petroleum in becoming a major player in the Northern Territory (NT) gas market.
With the NT to East Coast interconnect project steadily gathering momentum, Central expects the Dingo Pipeline to play an important role in the supply and connection of Central Australia to the eastern seaboard gas network.
The Dingo Gas Field Development, funded under a $30 million tranche of the loan facility agreement with Macquarie Bank, will see the construction of wellhead facilities, gathering pipelines, gas conditioning facilities, compression and custody transfer metering facilities, and is designed to service a gas sale contract with Power and Water Corporation of the NT.
First gas sales to Power and Water Corporation in Alice Springs are expected to commence in the first half of 2015.
Exploring onshore opportunities
INPEX has been given the all clear by the Northern Territory Government to pursue an exploration permit for onshore petroleum exploration acreage EPNT14-1, situated in the highly prospective Beetaloo Basin, 500 km south-east of Darwin.
Access to the acreage, consisting 50 blocks totalling approximately 4,000 sq km, would provide INPEX with additional potential oil and gas resources for development.
“While INPEX’s primary focus remains the delivery of the flagship Ichthys LNG Project, this announcement opens the door to possible greater INPEX investment in the NT,” INPEX Director Australia Ventures Tony Pytte said.
“This is a successful first step in which INPEX was assessed on work programs, expertise and financial capacity.”
INPEX tendered for the right to pursue exploration following the NT Government’s release of acreage in June and July last year.
Following this first step, INPEX expects a highly detailed and very closely monitored process of Native Title negotiation, overseen by the Department of Mines and Energy.
The process, which is required for any future offer of an exploration permit, will also involve consultation with pastoral land lease holders and could take up to two years.
INPEX’s Ichthys LNG Project is scheduled for first LNG in 2016, with a peak capacity of 8.4 MMt/a of LNG.
Equity interests in the project are INPEX 63.445 per cent, TOTAL 30 per cent, CPC 2.625 per cent, Tokyo Gas 1.575 per cent, Osaka Gas 1.2 per cent, Chubu Electric 0.735 per cent and Toho Gas 0.42 per cent.
Inquiry report supports NT fracking
An inquiry into hydraulic fracturing in the Northern Territory has recommended the use of hydraulic fracturing to develop the territory’s shale gas potential.
The report of the independent inquiry, commissioned by the NT Government, recommends that the environmental risks associated with hydraulic fracturing can be managed effectively subject to the creation of a robust regulatory regime.
“It is not yet known from the exploratory drilling programs whether commercial quantities of shale gas exist,” Inquiry Commissioner Dr Allan Hawke AC said.
“In the event that there are exploitable opportunities, then it will take some years to turn them into production outcomes.”
The report goes on to state that the substantive weight of agreed expert opinion leads the inquiry to find that there is no justification whatsoever for the imposition of a moratorium of hydraulic fracturing in the Northern Territory.
Australian Petroleum Production and Exploration Association (APPEA) Director – NT Steven Gerhardy said the report appeared to offer a sensible blueprint for the safe and responsible development of what could be an important new industry.
“Shale gas has the potential to provide much-needed jobs, investment and improved infrastructure in remote and regional areas,” Mr Gerhardy said.
“Royalties from shale gas could also become an important new source of revenue for the NT, increasing financial certainty for future governments and reducing their reliance on Canberra.”
Mr Gerhardy said Dr Hawke had produced a comprehensive and credible report that was a victory for science over scare mongering.
He urged activists who had campaigned for an inquiry into hydraulic fracturing to accept the inquiry’s findings.
NT announces new Energy Minister
In February, Dave Tollner was appointed the new Northern Territory Mines and Energy Minister, while also returning to the Ministry as Treasurer.
The appointment followed a tumultuous few weeks in Northern Territory politics, which saw a vote of confidence in NT Chief Minister Adam Giles by senior Country Liberal Party members, who retained his position after Willem Westra van Holthe was appointed to Deputy Chief Minister.
APPEA Director Northern Territory Steve Gerhardy said “As a former Treasurer, Dave Tollner knows how important the oil and gas industry is to the Territory’s future.”