Energy companies Jemena and Santos have signed a new contract on Friday to ship gas across the new Northern Gas Pipeline from the Northern Territory to Mount Isa.
The value of the contract has not been disclosed but the deal delivers Santos eight terajoules of Northern territory gas a day which will be used to provide energy for mining and mineral processing operations in the Mount Isa region.
With the pipeline expected to open within weeks, the new agreement means four fifths of NGP’s total capacity in year one of operations has now been contracted and Jemena Executive General Manager of Corporate Development Antoon Boey said the contract reinforced the pipeline’s importance.
“Today’s announcement proves strategic investment decisions like the NGP can help to mitigate forecast gas shortages while bolstering local industry and strengthening the Northern Territory’s growing gas credentials,” Mr Boey said.
Mr Boey said the new agreement would see Jemena transport gas to Santos for three years from the first day of commercial pipeline operations.
“This agreement provides more much-needed gas to the mining and processing sector in the Mount Isa area, and is a positive for the local community, who will benefit not only from jobs which rely on gas as a direct feedstock, but from the flow-on effects of a vibrant local economy and industry,” he said.
Santos Managing Director and CEO Kevin Gallagher said the agreement showed Santos was making domestic gas available where and when it is needed, efficiently and at competitive prices.
“This is a great commercial outcome for all the parties involved and it is also good for the east coast domestic gas market, connecting the Northern Territory into this supply grid,” Mr Gallagher said.
The announcement comes almost exactly a year on from the sod turning at the Mount Isa compressor station and Jemena said the $800m pipeline from Tennant Creek was tracking to schedule with first gas set to flow in “late 2018”.
The agreement follows on from a contract with Incitec Pivot Limited to deliver 32TJs of gas a day to its Brisbane port facility at Gibson Island.
According to the Australian Financial Review 71 terajoules a day of gas will now flow through the NGP and at full capacity of 32,000 terajoules a year, the NGP would meet almost 6 per cent of domestic east coast demand.
Jemena is now working on a potential extension of the line from Mount Isa to the Galilee Basin as it attempts to tap into the NT’s untapped unconventional gas resources.
Jemena has also signed an agreement with Senex Energy to build, own, and operate the Atlas Gas Processing Plant and Pipeline, connecting Senex’s new ‘Atlas’ gas field in the Surat Basin with Jemena’s Darling Downs Pipeline and the Wallumbilla Gas Hub near Roma.