Construction of a new pipeline linking Northern Territory gas to the eastern states is now on the horizon, with pipeline operator APA Group earmarking $2 million to conduct a feasibility study into the proposal.
A spokesperson for APA said the group has begun to formulate a project plan to undertake the study, which is envisaged to take up to two years.
The new pipeline project has attracted strong interest from gas buyers, sellers and government following the proposal last year, according to APA Group chief executive Mick McCormack.
“In NSW, the development of coal-seam gas is going nowhere as quickly as hoped, so there is a potential market, while up in Queensland the LNG projects will be sourcing a chunk of non-coal-seam gas,” McCormack said.
“Putting that together, we think the medium to longer-term solution for the southeast Australian market is Cooper Basin and heading in the Northern Territory. Customers would then have access to gas from anywhere between the Timor Sea and Bass Strait.”
With gas shortages anticipated at the end of the year as LNG plants on Curtis Island approach completion stage, a new pipeline would allow gas from the Timor Sea and onshore Northern territory to be made available.
The three Queensland LNG plants being built on Curtis Island are expected to triple demand in the linked eastern states in the next three years, driving up prices.
APA Group is considering two potential routes for linking pipelines operated in the Northern Territory with pipeline networks in South Australia, Queensland, Victoria and New South Wales.
One route runs 800km from Tennant Creek to Mt Isa, expected to cost around $900 million, and another runs 1000km from Alice Springs to the Santos-operated Moomba gas plant in South Australia, expected to cost around $1.3 billion.
Once concluded, APA will be in a position to negotiate commercial terms with shippers to reach a Financial Investment Decision sometime in the next two years.
APA Group announced strong profits on Wednesday, continuing a steady market rise with shares up 16c, or 2.6%, to an eight-month high of $6.44.