A new proposal for a gas pipeline from the Northern Territory to Queensland has been successful in winning the tender for construction.
Asian conglomerate Jemena took the $800 million contract for the North East Gas Interconnector (NEGI) Pipeline, which will run for 622 kilometres between Tennant Creek in the Northern Territory and Mount Isa in Queensland.
With project completion due in 2018, the 14-inch pipeline will provide jobs for 900 people during construction, 600 of which are anticipated to be local positions.
Queensland government reported the project would generate 560 construction jobs.
Associated contracts with local businesses are expected to be worth $112 million.
Northern Territory chief minister Adam Giles said the new pipeline would connect the Northern Territory gas market, an estimated 200 trillion cubic feet, with the energy needs of the eastern states.
“Without this pipeline, the populated parts of Australia would have huge difficulty securing their energy needs,” Giles said.
Northern Territory government has stated that royalties from their onshore oil and gas industry would be used for vocational education and training as well as other educational areas.
"Since I launched the process in Alice Springs at the end of October last year, the interest in and competition for the pipeline has been strong,” Giles said.
“The level of interest from international and domestic pipeliners indicates the government's decision to conduct a competitive process was the right one.”
Jemena managing director Paul Adams said the pipeline would drive commercial exploration and development of currently untapped gas reserves, and unlock the next phase of economic growth for the Territory.
"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,” Adams said.
"As further reserves in the NT are proved up, we can expand our scalable pipeline to meet strong demand from east coast customers."
Adams said that Jemena would seek to build a further link from Mt Isa to the Wallumbilla hub in Queensland.
“This will vastly improve the reliability of the gas transmission network by reducing sole reliance on Moomba as the hub for supplies,” he said.
“It will also introduce some much-needed competition into the east coast market, while accelerating the growth of the NT gas sector.”
Queensland premier Annastacia Palaszczuk said the new project was a coup for Queensland, creating jobs and opportunities for local suppliers, as well as “potentially” cheaper energy for north-west resources projects.
State development minister Anthony Lynham said the project would join to the existing Mount Isa to Eromanga gas pipeline, and from Eromanga to Moomba in South Australia.
“The extra gas supply will also be a boon for industry in the north-west, including Incitec Pivot, which uses natural gas to manufacture fertiliser at Phosphate Hill 160 km from Mount Isa,” Lynham said.
An alternate route was proposed through South Australia, however Lynham said he had lobbied for the project to be a benefit for Queensland.
“The Queensland route makes economic and environmental sense, particularly with the extensive established supply chain in and around Mount Isa with significant experience in the resources sector,” he said.
The minister also said the project would have the potential to reduce gas and power prices, to reduce operating costs for companies.
“Export and domestic eastern seaboard gas demand is forecast to treble by 2020 and more gas supplies can only help to contain energy prices that affect investment decisions,” he said.
Construction for the project is set to begin in 2017.