North East Gas Interconnector (NEGI) pipeline dilemma

North East Gas Interconnector (NEGI) pipeline dilemma

$1.3 billion North East Gas Interconnector (NEGI) gas project

North East Gas Interconnector pipeline overview

A new pipeline that would link the gas fields of the Northern Territory to the Southern and Eastern states of Australia has been attracting a lot of debate.

Gas giants Santos have come out in the press saying they prefer the gas pipeline to take the southern route. This would link the Northern Territory gas supplies into the eastern states grid, and be of greater benefit for Australia than if the pipeline want through Queensland.

North East Gas Interconnector (NEGI)

Brett Woods, vice-president eastern Australia for Santos, said that if Australia is to be strengthened in its natural resource portfolio, then the best route for the new gas pipeline should be by way of the moomba gas processing facility, which has the infrastructure network to connect to all markets in eastern Australia, which could also supply gas back into the pipeline.

Mr Woods’ statement comes as NT Chief Minister Adam Giles, a strong supporter of the North East Gas Interconnector (NEGI) project, has said he will soon announce the preferred bidder to build the gas transmission pipeline. Last year four contenders were short-listed as preferred suppliers on the project.

Two of the short-listed companies, APA Group and ASX unlisted Jemena, have put forward plans to build the pipeline using the Queensland route. This route will go from Tennant Creek to Mt Isa, which will be cheaper and faster to build, and will not be reliant on any taxpayer funding.

If this route is chosen then the Curtis Island processing facilities off Gladstone would benefit from the processing capabilities on site. Gas customers in Queensland would also benefit from this route.

The DUET Group and a company owned by China National Petroleum Corporation make up the remaining two bidders and are looking to take the gas pipeline south through South Australia. This route from Alice Springs to Moomba, is longer and the topology is much more difficult than the Queensland route.

This of course makes the project more expensive, however it would make access to the gas from the Northern Territory easier for NSW, which is struggling to maintain sufficient supplies for its domestic consumers.

The Northern Territory government has estimated it holds about 200 Tcf in gas resources, a vast amount of relatively clean energy which can serve Australians for many years in the future.

Santos of course are pro taking the pipeline down into South Australia rather than across the middle of Queensland because they own the Moomba gas processing plant. There are huge financial benefits for the South Australian government and Santos if the Alice Springs-Moomba route is chosen.

The pipeline through Queensland could come in at some $700 million to $800 million, while the southern route is much more expensive and estimates have been given as somewhere in the region of $1.3 billion. Owing to the construction of the pipeline, new gas exploration activity is expected to ignite in the NT given the fact the markets for the gas would stretch from south as NSW and even into Victoria.

It will be interesting to see the outcome of the project because one route would require funding from the government of some $300 million, whereas the other (QLD) would be funded by private equity partners. According to Central Petroleum managing director Richard Cottee, a strong backer of the NEGI project, the federal government’s $5 billion Northern Australia Infrastructure Fund would be used to fund the Southern pipeline route.

Facts about the MOOMBA gas plant

Situated in the Cooper/Eromanga Basins in South Australia, approximately 770 kilometres north of Adelaide.

The Moomba gas facility takes its production from 115 gas fields and28 oil fields containing536 producing gas wells and 177 producing oil wells over about 5,600 kilometres of pipelines and flowlines via 24 oil and gas satellite facilities with compressor stations.

Moomba also incorporates substantial underground storage for processed sales gas and ethane.

Where the gas jobs are

Job Seekers: find out more about the Santos Moomba gas processing facility (this is the first step to getting in on the project)

Discover more about the Cooper Basin – the location of the Moomba gas plant

Moomba gas plant South Australia from the air

See how a gas pipeline is constructed (American version)

Read more about the North East Gas Interconnector (NEIG) project


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