The Australian Oil & Gas Review
A Vital Connection
Jemena's northern Gas Pipeline is key to boosting east coast supply and unlocking the nt's gas potential.
“As we enter The next stage Of The pipeline’s Development we expect TO Draw On The skills AND TALENT Of LOCAL Communities, with more Than 600 Of The ngp’s Approximately 900 Jobs ear-marked for LOCALS.”
Once developed, the Northern Gas Pipeline (NGP) could play a crucial role in driving the exploration and development of untapped gas resources in the Northern Territory and relieve domestic shortages on the east coast of Australia.
AFTER navigating land access issues during the first quarter of 2017, construction of Jemena’s $800 million Northern Gas Pipeline began in earnest in July this year after the company successfully navigated land access issues during the first quarter.
The 622km pipeline through Northern Australia will connect the NT’S vast gas fields to the east coast market, from the Amadeus pipeline in the west to the Carpentaria pipeline in the east.
Jointly owned by the State Grid Corporation of China and Singapore Power, energy infrastructure group Jemena has a diverse portfolio of energy and water transportation assets across the east coast of Australia with more than $10.5 billion worth of major utility infrastructure.
It is Jemena’s third major pipeline infrastructure project in Australia, following on from its 627km Queensland Gas Pipeline that delivers gas from the Surat/cooper Basin to Gladstone and Rockhampton markets; and the Eastern Gas Pipeline which feeds supply from Victoria’s Gippsland Basin to Sydney, the ACT and regional NSW.
Jemena managing director Paul Adams said the project would provide opportunities for future growth in the Territory.
“Building [the pipeline] will drive commercial exploration and development of currently untapped gas reserves, unlocking the next phase of economic growth for the Territory and helping build a stronger Northern Australia,” Mr Adams said.
“The pipeline is cost-effective and relatively quick to build, so it will support a strong gas industry for the Territory by getting gas to market at a competitive price, accelerating development of NT gas fields and helping create jobs and opportunities in the gas industry.
“As further reserves in the NT are proved up, we can expand our scalable pipeline to meet strong demand from east coast customers.”
Mr Adams said routing the pipeline to Mt Isa was the most efficient way to get gas to the east coast, as it reduced potential construction risks and required lower contracted gas volumes to be viable.
“Going south just wouldn’t have provided the same catalyst to fast track development of the NT’S gas fields,” he said.
Momentary setback
A dispute between the Wakaya traditional land owners and the Northern and Central Land Councils pushed the project start date from April to July and forced a re-sequencing of the project’s construction timeline.
Jemena said members of the Wakaya Land Trust requested further consultation before granting land access rights – even though the company had received consent to begin construction in April.
“Earlier this year Wakaya came back and said they needed a bit more time to understand the project and the potential for employment opportunities,” Mr Spink said.
“It was important for Jemena that traditional owners fully understood what role they would be able to play in the construction of the project.”
Lead pipeline contractor Mcconnell Dowell was subsequently terminated from the project as Jemena re-evaluated a new start date and project timeline.
However, after considerations and agreements made between Wakaya, the Land Councils and Jemena, Mcconnell Dowell was subsequently reappointed to build a large proportion of the pipeline.
“Our previous contract with Mcconnell Dowell was premised on them building the pipeline in one hit this year,” Mr Spink said.
“When the Wakaya issue first arose we re-sequenced our works and ultimately retendered a deal with Mcconnell Dowell to build the first 481km of the pipeline.
“The back end of the pipeline to Mt Isa was then competitively tendered and won by Spiecapag.”
Mr Adams welcomed the dropped contractor back to the project after consent for construction was granted.
“With land access now agreed across much of the Territory, we now have the certainty we need to appoint Mcconnell Dowell to construct this section of the NGP,” Mr Adams said.
“building [The pipeline] will Drive Commercial exploration AND Development Of Currently untapped gas reserves, unlocking The next phase Of economic growth for The Territory AND helping build A stronger northern AUSTRALIA.”
“The industry is ready TO invest billions in The nt when – AND if – The government’s fracking moratorium is Lifted.”
project start
Construction of the NGP officially commenced mid-july, with more than 90 people attending a sod-turning ceremony near Tennant Creek to mark the occasion.
Northern Territory chief minister Michael Gunner, NT Minister for Primary Industry and Resources Ken Vowles, member for Barkly Gerry Mccarthy, member for Mount Isa Robbie Katter, and traditional owners and pastoralists from across the pipeline route were in attendance.
At the event, Mr Adams said the support of the local community had been crucial in progressing the project.
“We’ve worked closely with the communities – including traditional owners – surrounding the pipeline route throughout the planning phase, having relied on their expertise and local knowledge and we thank them for their insight and support,” Mr Adams said.
“As we enter the next stage of the pipeline’s development we expect to draw on the skills and talent of local communities, with more than 600 of the NGP’S approximately 900 jobs ear-marked for locals.
“Pleasingly, 58 graduates of Jemena’s Project Ready Training Program – which provides training and development opportunities for local Aboriginal people – have the opportunity to take up full-time employment during construction of the NGP.”
Mr Spink said he was proud of the enthusiasm and commitment from personnel trained under the program.
“These were unskilled locals looking for work, and the lasting benefit that we at Jemena are quite proud of is having been able to provide them with the necessary qualifications and employment in the construction industry – something they can potentially build a career out of.”
Mr Spink said the project was now moving at a much quicker pace, with almost all approvals necessary tied up and the first wave of construction teams mobilised to site.
“Construction of the Mt Isa compressor station has now begun, and our Phillip Creek compressor station outside Tennant Creek is well under way now with earthworks largely completed,” he said.
Mr Spink said contractors Mcconnell Dowell and Spiecapag had now started delivering on their respective sections of the project.
“Both contractors have made really good engagement with recruiting local people and contractors, in line with commitments outlined as part of our Industry Participation program,” he said.
Future options
With commercially ready gas resources in NT, the development of the NGP is being increasingly seen as a solution to domestic gas shortages on Australia’s east coast.
Mr Adams said the pipeline, once developed, would play a “crucial role” in helping resolve the east coast gas supply crisis.
“This project is a boon for businesses that rely on gas as either a feedstock or fuel source by providing them with access to new gas at a cheaper price, particularly when compared to the costs associated with transporting gas over long distances from the Moomba Gas Hub to QLD and NSW,” he said.
Currently, the NT has a moratorium in place to prevent development of shale gas projects, however an inquiry by the NT Government into hydraulic fracturing is underway and due to come to an assessment towards the end the year.
An interim report released on schedule in July was welcomed by the Australian Petroleum Production & Exploration Association (APPEA) as a sign that the inquiry was on track to be completed this year.
APPEA NT director Matthew Doman said the inquiry was clearly taking a comprehensive approach and the industry would take time to study the report closely.
“We look forward to the panel concluding its work and enabling the NT Government to make a decision on development of the Territory’s abundant gas resources.
“The industry is ready to invest billions in the NT when – and if – the government’s fracking moratorium is lifted.”
“We believe developing the Territory’s natural gas resources offers significant public benefits, including jobs and training opportunities in regional communities, improved infrastructure and services, and direct benefits to the traditional owners and landholders who host development on their land,” he said.
Mr Adams said lifting the moratorium would unlock the opportunity for Jemena to expand and extend the NGP.
“Jemena has already commenced investigative work on expanding the NGP and extending it south from Mt Isa to the Wallumbilla Gas Hub to further integrate Territory gas into the east-coast gas grid, provided additional gas supplies are made available in the Territory.
“Our modelling suggests that the pipeline can be relatively easily expanded and extended to transport up to, or beyond, 700 terajoules (TJ) of gas per day.
“This far exceeds gas used on an average day in the New South Wales and Queensland markets.”
First gas is expected to flow through the NGP in late 2018.
“We have increasing interest at the moment due to shortage fears on the east coast and extending the pipeline and connecting the significant gas reserves from NT basins would help address the issue, Mr Spink said.
“In the long term, the moratorium needs to be lifted and the fracking industry subject to appropriate regulation from the Government to drive the gas economy in the Territory.”