New gas pipeline to link east and west markets

Federal industry minister Ian MacFarlane yesterday announced plans to build a national gas network that could prevent gas shortages in NSW and the corresponding price hikes.

MacFarlane said part of the plan would include a 1000km pipeline from Alice Springs to Moomba in South Australia, at a cost of $1.3 billion, linking the Northern Territory to the east coast gas market.

Combined with the pipeline currently under construction from Darwin to the Browse Basin, the national gas network would allow Western Australian gas to be sold into the domestic east coast market.

MacFarlane told Fairfax Media that an impending gas shortage in NSW would cause gas prices to rise significantly in the winter of 2016.

“It [gas] could become very expensive. There are people speculating it could cost $10 a gigajoule or more,” he said.

MacFarlane has been in discussions with NT chief minister Adam Giles, and said that the plan is “more than a vision”.

The industry minister said the plan would be necessary to keep NSW well supplied, as the state only produces five per cent of its own gas, and shortages will occur even if Santos-led gas drilling projects in the state reach production.

“The only solution to the gas supply problem in NSW appears to be interconnection,” Macfarlane said.

“Theoretically you could deliver from Browse to Sydney but it wouldn't ever happen, it would be done on the basis of swaps [of gas from one market on to the next]. You wouldn't see the molecule actually delivered into Sydney.”

He said the new pipeline could deliver gas to NSW within three years, two years faster than developing its own projects. 

MacFarlane also said no Commonwealth funding has been proposed for the project, but more would come to light once decisions were made about how to build the pipeline.

Images:; SMH

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