Eutility's news

All news articles relating to the energy and telecommunications industries

Jemena eyes partners for $5b-plus northern gas push

Pipeline owner Jemena has unveiled plans for a potential $5 billion-plus expansion and extension of its grid in Australia’s north to bring gas from the remote Northern Territory to the east coast and is on the lookout for partners to join the ambitious project.

A deal that the Chinese-controlled gas pipeline has signed with NT shale gas explorer Tamboran Resources for the transportation of gas from the Beetaloo Basin is the starting point for the expansion project, which would involve new pipelines in both the NT and Queensland.

“It’s part of a broader strategy to develop the critical infrastructure that’s required to get the Beetaloo effectively moving quickly, and then the ability to scale it up as well,” Jemena chief executive Frank Tudor said in an interview.

“It’s going to be an enormous challenge in terms of the opportunities in the North and the South and we would certainly be open to working with partners to develop that.”

While unlisted Jemena, owned by China’s State Grid Corporation and Singapore Power, hasn’t previously partnered up for gas pipelines, Mr Tudor said it “makes sense” given the size of the project, the risks and the development lead times involved.

Speaking ahead of a formal announcement of the plan at a conference in Darwin on Wednesday, he said partners could “absolutely” include infrastructure investors or pension funds: “Australian-based super funds… all of those would make admirable partners.”

The venture could apply for funding support from federal government initiatives to promote gas infrastructure, either through measures included in the gas plan for a recovery from COVID-19 or the Northern Australia Infrastructure Facility.

The Beetaloo Basin is one of the strategic gas provinces singled out in the Morrison government’s gas plan announced in September, which also set out the aim to develop the gas hub at Wallumbilla near Roma into a mini version of the US’s Henry Hub.

“If we are talking about having to up-size a pipeline above what the immediate requirements were with a view to a longer-term game, then yes that’s certainly something we talk to government about, and the likes of NAIF and other potential government agencies that could support that effort,” Mr Tudor said.

The project would start with two new billion-dollar pipelines, one to connect the Beetaloo to Jemena’s Northern Gas Pipeline between Tennant Creek and Mount Isa in Queensland, the only existing pipeline outlet for NT gas beyond its borders, and the second to connect the inland Galilee Basin in Queensland to Wallumbilla. Those could be completed by 2025.

The biggest part of the project involves a circa $3 billion expansion of the small NGP and its extension to link with the Galilee pipeline, envisaged in the late 2020s.

A third phase would see the Beetaloo pipeline extended north to Darwin, assuming the basin’s vast gas resources support an expansion or LNG facilities there on top of supplying the east coast and the Gladstone export plants. That phase, also involving up to $1 billion, is anticipated in the early 2030s.

Expectations around the potential for Beetaloo gas surged last month on better-than-expected test results from a well drilled by Santos and Tamboran, which caused Tamboran chief executive Joel Riddle to describe the region as “the hottest play on the planet”.

Mr Riddle was optimistic of initial volumes of gas from the Beetaloo reaching the east coast as early as 2023 or 2024, although Mr Tudor said 2025 was more realistic given the need for new pipeline infrastructure.

In all, Jemena’s plan involves building more than 2000 kilometres of pipeline infrastructure over the next five to 10 years. About 4000 jobs would be created, mostly in regional areas.

But the plan is effectively in competition with other proposed pipelines targeting Beetaloo gas, including a 950 kilometre line proposed by Cheung Kong Group, Central Petroleum and Macquarie that would connect the NT to the east coast grid southwards via Moomba in South Australia’s north. Pipeline giant APA Group is meanwhile examining a $700 million expansion of capacity to bring gas south from Queensland.

Mr Tudor said the rivalry is healthy to ensure the most cost-effective option is built, but it was important to avoid duplication and leverage off infrastructure already in place.

He said it made more sense to focus Beetaloo gas towards LNG export plants in Gladstone and to use LNG imports to meet demand in the south through terminals that could be more rapidly developed and take advantage of seasonal opportunities to buy cheaper cargoes during the Northern Hemisphere summer.

The new Beetaloo pipeline, which would be open access, would have a capacity of about 180 terajoules a day, while the Galilee Gas Pipeline – already the focus of an infrastructure agreement between Jemena and explorer Galilee Energy – would be about 200 TJ/day. The NGP would be progressively expanded from around 90 TJ/day to 1000 TJ/day.

The Galilee Basin is also among the strategic areas identified in the federal government’s gas plan.

Source: Financial Review