Macquarie-backed gas pipeline expected to ease supply shortfall due to hit in 2024
A new $1bn-plus gas pipeline backed by Macquarie aims to deliver Northern Territory gas to east coast manufacturers.
A new $1bn-plus gas pipeline backed by Macquarie aims to deliver Northern Territory gas to east coast manufacturers, easing an expected supply shortfall due to hit in 2024.
The 950km pipeline - funded by Macquarie, Hong Kong’s CK Group and Central Petroleum - will move gas from the NT’s Amadeus Basin near Alice Springs to Santos’ Moomba plant in South Australia.
The project aims to start transporting gas by early 2024, heading off a projected supply squeeze for the east coast as traditional production from the southern Bass Strait declines.
The development may also appeal to the Morrison government after the National Covid Co-ordination Commission recommended possible intervention to underwrite parts of the gas industry including stakes in pipelines in a bid to boost manufacturing. The $3bn Northern Australia Infrastructure Facility which provides low-cost loans could also emerge as a backer of the proposed facility.
“When we talk about government initiatives and how this fits in I think this is really a poster child for the government working with private industry to make a difference in the gas market when it needs it,” Central Petroleum chief executive Leon Devaney told The Australian.
The pipeline, which is targeting a final investment decision in the second half of 2021, would be less than half the distance of existing supply routes. Jemena’s 622km Northern Gas Pipeline runs between the NT’s Tennant Creek and Queensland’s Mount Isa which then connects to APA Group’s 840km Carpentaria Gas Pipeline.
While Central will target “low-cost” supplies, the producer still expects contracted gas will be sold in a $8-10 a gigajoule range reflecting the tight market conditions.
“We’re a price taker and there’s nothing that we’re going to do that’s going to change the east coast market drastically,” Mr Devaney said. “What we’re going to be doing is adding more supply so that the clearing price drops. But if you start looking at 2024 and beyond, given that projected shortfall and the cost of production that fields like Narrabri will have, then a market price of $8-10 is my expectation and that’s pretty consistent with a lot of forecasts out there.”
A spat has broken out between producers and big users after the competition regulator said gas is selling on Australia’s east coast at almost double the price it is being exported for.
New forecasts from gas producers show several gas fields could end production from mid-2023 to mid-2024, the Australian Energy Market Operator said.
If they shutter supply sooner, southern states could face supply gaps in peak daylight hours as early as 2023 during winter, when average consumer demand is three times more than in summer.