The Northern Territory’s gas resources are located predominantly in the onshore Palm Valley and Mereenie gas fields in the Amadeus Basin, as well as in the offshore Bonaparte Basin. To date, approximately 370 Bcf of gas has been produced in the territory.
Gas reserves both onshore and offshore the territory total approximately 1,000 PJ, which could supply the territory’s electricity needs for the next 25-30 years. In addition, gas reserves off the coast of the Northern Territory are well placed to supply Asian markets, which could see the territory emerge as an international gas hub.
Past: discoveries in central Australia
Oil was first discovered at the Mereenie Oil Field in 1963 by the West Mereenie-1 exploration well. Two years after the oil discovery, gas was discovered by the Palm Valley-1 exploration well.
In 1983, the 200 mm diameter, 147 km Palm Valley to Alice Springs Gas Pipeline was commissioned. It was constructed by Holyman Ltd and has a capacity of 363,000 cm/d.
Envestra purchased the pipeline in 1999 and currently has a gas agreement in place with the Power and Water Corporation.
Santos’ Mereenie Oil Pipeline was built to carry the crude oil 269 km from the Mereenie Oil Field to the Brewer Estate, located south of Alice Springs. The pipeline is 200 mm in diameter and completed construction in 1985. Oil is stored at the Brewer Estate and then loaded onto trucks for shipment to Port Bonython in South Australia.
In 1985 and 1986, the 1,500 km Amadeus Basin to Darwin Pipeline (now known as the NT Gas Pipeline) was constructed, following the Northern Territory Government’s decision to source gas from the Amadeus Basin rather than constructing a coal-fired power station on Channel Island.
A consortium called NT Gas had convinced the Government that the cost of gas generated power could be significantly cheaper than originally expected.
The pipeline, which is the second longest in Australia, was completed in just 16 months.
The pipeline runs from gas production facilities at the Palm Valley and Mereenie fields located west of Alice Springs, to Darwin and has varying diameters of 300 mm from Palm Valley to Tylers Pass, 250 mm from Mereenie to Tylers Pass, 350 mm from Tylers Pass to Mataranka, and 300 mm from Mataranka to Darwin.
Under the arrangement set in place, NT Gas built the pipeline through project managers Williams Brothers – CMPS and on completion, sold it to the banks. The banks then leased the pipeline back to NT Gas as operator.
The pipeline was constructed in five spreads with Newham International (a joint venture between Eric Newham and Korean-based ICC), Saipem, McConnell Dowell and a Transfield – Prentice Brothers and Minson joint venture awarded different pipeline spreads.
The pipeline continues to be operated by NT Gas, whose major shareholder is the APA Group, and currently delivers approximately 22 PJ/a of natural gas to its main customer, the Power and Water Corporation, for electricity generation.
In 1995, the 150 mm diameter, 332 km Daly Waters to McArthur River Gas Pipeline was completed. The pipeline has a capacity of 6 PJ/a and supplies gas to the McArthur River Mine. The pipeline was constructed by a consortium led by McMahon Limited. It is currently owned by the Power and Water Corporation and is maintained by NT Gas.
Present: bringing gas to shore
As gas reserves in the Amadeus Basin decline, the Northern Territory is looking toward offshore reserves to power the territory. Producing fields in the Bonaparte Basin include the Bayu-Undan and Blacktip fields, with a number of other developments set to come online in the next few years.
Bayu-Undan Gas Field Development
Operated by ConocoPhillips, the Bayu-Undan field has recoverable resources of more than 3.4 Tcf of gas and approximately 400 MMbbl of LPG and condensate.
The development of the field, completed in 2005, included the construction of a 660 mm diameter, 500 km subsea pipeline from the Bayu-Undan field to a 3.24 MMt/a LNG plant located at Darwin harbour. The LNG plant has the capacity to expand to 10 MMt/a as new gas fields in the Timor Sea are approved for development.
The majority of Bayu-Undan gas is converted to LNG and shipped overseas for export, with some provided to the Power and Water Corporation for power generation.
The subsea pipeline is administered under three different acts – 92 km is administered by the Northern Territory’s Energy Pipelines Act, 367 km is administered under the Commonwealth Offshore Petroleum Act for Western Australia and the Northern Territory, with the remaining administered by the National Petroleum Authority of Timor Leste.
Blacktip Gas Field Development
ENI Australia is nearing completion of the Blacktip Gas Field development in the southern Bonaparte Basin in order to supply the Northern Territory’s domestic gas needs. The field is to supply Power and Water Corporation with 750 PJ of gas over the next 25 years.
Gas from the field is piped to a gas processing facility at Wadeye via a 460 mm, 110 km subsea pipeline. From there gas is transported to the Amadeus Basin to Darwin Pipeline via APA Group’s Bonaparte Gas Pipeline. Saipem completed construction of the Blacktip pipeline in May this year and at the time of writing, commissioning was imminent.
Bonaparte Gas Pipeline
In 2006, APA Group, and Power and Water Corporation signed a gas transportation agreement culminating in the construction of the Bonaparte Gas Pipeline. The 300 mm diameter,
287 km pipeline links the gas processing plant at Wadeye to the Amadeus Basin to Darwin Pipeline at Ban Ban Springs. As Amadeus Basin reserves decline, the Bonaparte Gas Pipeline is expected to become a major gas delivery channel for the territory.
AJ Lucas completed construction of the pipeline, which became operational on 10 December 2008.
Ichthys Gas Project
The Ichthys Gas Field is located in the Browse Basin, approximately 440 km offshore northwest Australia. The field is expected to contain 12.8 Tcf of gas and 527 MMbbl of condensate.
Inpex is currently completing front-end engineering and design (FEED) on the development of the field, which is set to involve an 1,066 mm diameter, 850 km offshore pipeline connecting to an LNG facility located at Blaydin Point on the Middle Arm Peninsula, Darwin.
AMEC Engineering has been contracted to complete the offshore FEED for the project, supported by JP Kenny and Aker Solutions. JP Kenny will conduct pipeline and associated flowline FEED, whereas Aker will carry out FEED on the central processing facility and FPSO hull.
The JKC joint venture (JGC Corporation, KBR and Chiyoda Corporation) has been awarded FEED for the onshore facilities – comprising the LNG plant, which is initially expected to produce 8 MMt/a of LNG.
A final investment decision is expected in 2010, with first gas produced in 2015.
Greater Sunrise Gas Fields Development
Woodside Petroleum, Shell, ConocoPhillips and Osaka Gas are currently considering the development of the Greater Sunrise Gas Fields. The fields have estimated recoverable reserves of 7.7 Tcf of gas and are located in the Timor Sea approximately 450 km northwest of Darwin and 150 km south of East Timor.
Woodside is considering two options for the development of the field – either a floating LNG facility or piping the gas to Darwin for processing. The pipeline option could include an expansion of the Wickham Point Bayu-Undan LNG plant at Darwin.
A decision is expected in the second half of this year.
A number of oil and gas fields in the Timor Sea have yet to be developed, providing potential for the offshore pipeline sector. In addition, Central Petroleum has cited potential development options for its onshore acreage in the Pedirka Basin, central Australia.
Evans Shoal and Petrel/Tern fields
The Petrel/Tern Gas Fields are estimated to have recoverable gas reserves of 1.4 Tcf of gas and were first discovered in 1969 and 1971 respectively. The fields are located approximately 250 and 300 km west of Darwin respectively in the Bonaparte Basin.
Field development options include the installation of unmanned offshore production platforms, with a pipeline to a gas treatment plant south of Darwin. The field is a joint venture between Santos and Origin Energy.
Also a Santos asset, the Evans Shoal field has estimated recoverable reserves of 6.6 Tcf of gas. The field is a joint venture between Santos, Shell, Osaka Gas and Petronas. Project interests from the two Asian companies bode well for the development of the field into a gas export project.
However, Santos has recently said that it is interested in either accepting project partners or selling its interest in the Timor Sea gas projects, preferring instead to focus on LNG developments in Queensland and Papua New Guinea.
Karoon/ConocoPhillips joint venture
ConocoPhillips and Karoon Gas have commenced a drilling program in the Browse Basin with a view to discover 7 Tcf of gas for the sanction of a possible LNG project and associated pipeline.
The project would include the construction of a 1,000 km long natural gas pipeline running through the Timor Sea to connect the Browse Basin to an onshore LNG plant. Current activities include a drilling program to determine reserves for the project. A timeframe for the development of field infrastructure has not been determined.
Timor Sea LNG
MEO Australia has plans to develop the Timor Sea LNG Project, located in the Bonaparte Basin approximately 275 km northwest of Darwin, as a hub for the commercialisation of surrounding gas fields.
The company has said that a 3 MMt/a LNG plant would require approximately 3 Tcf of gas to operate for 20 years. MEO said that gas could be sourced from regional fields facing economic challenges, including large distances from land and expensive construction costs.
The project has the possibility to impede major offshore pipeline development in the area, as MEO has said that the project avoids the expense of a pipeline to Darwin for gas field operators in the area.
Central Petroleum prospects
Onshore, Central Petroleum’s Pedirka Basin acreage is estimated to contain between 34-70 Tcf of prospective recoverable coal seam gas (CSG) resources.
A report commissioned by the company revealed that an area of the Simpson Desert straddling the South Australian/Northern Territory border shows huge potential development. The company has cited possibilities for underground coal gasification, CSG, gas-to-liquids and pipeline sales.
The company has said that it is interested in linking into existing infrastructure in order to supply the domestic market in Darwin. If the company pursues this option, the reserves could secure additional gas to keep the Amadeus Basin to Darwin Pipeline in service.
Pipeline possibilities in a changing climate
In March this year, the Australian Government released offshore permits for carbon capture and storage use, including two permits in the Petrel sub-basin, located offshore Northern Territory near the coast of Darwin.
Since then industry sources have speculated that a greenhouse gas storage and conversion plant of a “˜reasonable size’ could be developed in the Northern Territory, including associated pipeline infrastructure.
Co-operative Research Centre for Greenhouse Gas Technology Chief Executive Officer Peter Cook said that companies with interests in the territory, such as ConocoPhillips and Inpex, could choose to “˜share’ a conversion plant and associated pipelines such as this would make more sense economically.
A spokesperson for the Power and Water Corporation said that CCS developments are “imperative for the future of the gas industry in the Northern Territory”. The spokesperson said that geosequestration of the carbon dioxide produced from gas projects will aid the continued development of gas in the territory as the Australian Government moves to introduce a Carbon Pollution Reduction Scheme.
In addition, Northern Territory Resources Council (NTRC) Chief Executive Officer Scott Perkins has said that the territory is considering using more gas for power generation due to the rising costs associated with diesel following the introduction of an emissions trading scheme.
Many of the remote communities within the Northern Territory are powered by small, autonomous diesel-powered electricity grids, with few sites powered by gas.
Mr Perkins said that under an ETS, diesel-powered generation will prove more costly than gas. However, he also noted that the initial cost associated with establishing infrastructure to transport gas would prove costly.
“You either have to lay a pipeline or you have to find some other method of getting the gas to remote locations and then there are issues with changing the machine there that actually generates electricity, so it’s not an easy undertaking,” he said.
The Northern Territory Government said that it is taking steps to stimulate the gas sector by offering access to land at attractive rates and offering assistance for the development of supporting infrastructure.
The Northern Territory is home to one of the longest pipelines in Australia, however the nature of settlement within central Australia has meant that minimal transmission and distribution pipeline networks in the territory have developed.
As reserves in the Amadeus Basin reach a natural decline, the territory has actively sought to secure other gas sources, with the development of both the Blacktip Gas Field and the Bonaparte Gas Pipeline providing an additional supplies.
Offshore, there are many prospects for pipeline development as Timor Sea gas fields are commercialised. The amount of reserves present in the Bonaparte and Browse basins bodes well
for the territory, as does the close proximity to Asian markets.
A recent submission by the NTRC said that, with two gas plants in Darwin, it is conceivable that a gas hub could be developed.
Northern Territory Chief Minister Paul Henderson has certainly been championing the territory’s well placed location for an LNG hub to supply the Asia Pacific. Since the start of the year, Mr Henderson has met with key LNG companies in the United States and Japan, outlining plans for Darwin to become a regional LNG hub.
The territory has exciting prospects for the future as major LNG companies express interest in developing projects in the area.