Deloitte: Northern Territory bullish on shale gas

Development of a shale-gas industry in Northern Territory could drive significant long-term economic growth and generate as much as $1 billion (Aus.) of government revenue, according to recent study by Deloitte Access Economics commissioned by the Australian Petroleum Production & Exploration Association.

The study comes hard on the heels of a bullish forecast from Northern Territory Chief Minister Adam Giles saying that a northeast gas interconnector pipeline between Northern Territory and the Australian east coast will be on stream by 2018.

The Deloitte report examined two potential growth scenarios based on the supply of shale and tight natural gas between 2020 and 2040. The findings suggested that a successful development would generate about 30 petajoules/year of gas for domestic use within Northern Territory plus 56 petajoules/year for the east coast and the potential for two brownfield LNG plants.

Under this scenario, gross state product (GSP) would increase by $5.1 billion and the gas sector would add $200 million (Aus.) to Northern Territory’s revenues by 2040.

Under the highest growth scenario—three brownfield LNG plants and supply of gas to the east coast to meet most of its projected future gas supply shortfall at 84 petajoules/year and Northern Territory demand of 80 petajoules/year—the cumulative increase in GSP could reach $22.4 billion in net present value (NPV) terms with an increase in territory government revenues of $961 million NPV.

Both scenarios were based on data from the Australian Energy Market Operator.

The scenarios require discovery of commercial gas and an increased Northern Territory pipeline network, including development of the northeast gas interconnector pipeline currently being studied by the APA Group.

The line could cost $900 million-1.3 billion depending on the route selected.

APA is looking at three potential routes: Alice Springs to Moomba (1,100 km), Tennant Creek to Mt Isa (620 km) and from midway between Alice Springs and Tennant Creek to the Carpentaria gas pipeline (700 km).

Much is predicated on a successful outcome of the recent farm-in plans of US entrepreneur Aubrey McCledon’s private equity-funded American Energy Partners to permits held by Armour Energy and Empire Energy Group in the Proterozoic-age McArthur basin. Letters of intent with regard to the farm-in were signed last week.

There is also exploration work being done in the Georgina and Beetaloo basins for both conventional and unconventional gas reserves.

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