Firm given permission to build NEGI gas pipeline in Australia

Energy utility company Jemena, jointly owned by State Grid Corp. of China and Singapore Power, has been granted preferred proponent status to build a proposed $800-million (Aus.) natural gas pipeline link between the Northern Territory and the Australian Eastern States gas markets.

Jemena beat Australia’s APA Group with its submission. According to Northern Territory Chief Minister Adam Giles, the choice came down to the company most prepared to take the risk for the reward. He added that the Northern Territory government will not take part in any financing of the pipeline.

The 622-km North East Gas Connector (NEGI) pipeline will branch off from the Alice Springs-to-Darwin line at Tennant Creek and extend to the mining town of Mount Isa in north-central Queensland, which is already connected to the east coast.

Pipeline proponents were offered two potential routes for the interconnector: one to Mount Isa and one to the Cooper basin hub at Moomba in South Australia. The Moomba route is arguably the best long-term option, but it would require a longer pipeline and therefore cost more.

Jemena says the line will be built without any financial commitment needed from Australian taxpayers. It aims to complete the 14-in. line by 2018.

Jemena already owns and operates energy and water transport assets across Australia’s east coast and has $9 billion (Aus.) worth of utility infrastructure.

The line will be constructed by the company’s construction partner, McConnell Dowell, which is owned by South Africa’s Aveng Group.

The Northern Territory is estimated to have more than 200 tcf of gas resources. However, less than 200 petajoules has been proved to date in onshore fields. The Northern Territory government says this is because the territory’s market is too small to create much interest in gas exploration. Giles says the construction of the NEGI pipeline is expected to change that mindset.

Not everyone is as enthusiastic. South Australia Resources Minister Tom Koutsantonis says the Mount Isa option will lead to higher gas prices for users in southeast Australia. He says sending the Northern Territory gas into Queensland will put up barriers to getting it to New South Wales where the gas is most urgently needed.

There are claims the northern route will increase the cost of gas into New South Wales by $1.40 (Aus.)/gigajoule. The Queensland route backers counter by saying the Mount Isa route will free up gas in Queensland for use in New South Wales.

There are others who suggest that the Moomba route could be added later if the northern route sparks exploration success.

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