Northern Gas Pipeline: Lack of producers cited as diameter of Tennant Creek-Mt Isa pipeline reduced
The company building a gas pipeline to join the Northern Territory with the east coast will reduce the diameter of the piping, citing the low number of NT gas producers ready to commit to delivering the gas.
Key points:
Tennant Creek-Mt Isa gas pipeline diameter reduced from 14 inches to 12 inches
Lobby group APPEA says NT Labor Party's moratorium on fracking a factor in decision
Labor leader Michael Gunner said CLP mishandled tender process
Pipeline operator Jemena has said to meet its contractual obligations to complete the project and have first gas flowing by 2018 it needed to order the steel by yesterday.
The pipeline will now be 12 inches in diameter instead of the alternative size of 14 inches.
"Unfortunately there are currently not enough NT gas producers who are ready to commit to delivering gas to customers to be able to economically justify a larger pipeline at this stage," the company said in a statement.
"While we're disappointed we couldn't build a bigger pipeline from the start, we are confident about the prospects for NT gas in the longer term.
"The NGP [Northern Gas Pipeline] is a scalable pipeline, and the capacity can be relatively quickly increased as demand for transportation services increases," it said.
NT ALP's fracking moratorium 'a factor in pipeline decision'
Under the tender contract awarded by the Government, Jemena could build either a 12 or 14-inch pipeline, depending on the demand for gas transportation services.
The peak lobby group for the oil and gas industry APPEA said Labor's proposed moratorium on fracking was a factor in Jemena's decision.
"The prospect for the near-term production of gas in the Northern Territory has been impacted by Labor's moratorium," APPEA NT director Matthew Doman said.
He said the pipeline could not reach its full potential with developing additional natural gas resources in the NT.
"You can't do that without fracking," he said.
But Mr Doman also said there were international issues affecting the gas industry.
"The reality is this is a very challenging year for the oil and gas industry globally," Mr Doman said.
"We see the oil price at very low levels.
"But right now in the Northern Territory the [Labor] policy in relation to hydraulic fracturing is one of our major concerns."
Politicians trade blame for pipeline decision
NT Chief Minister Adam Giles also took aim at Labor.
"We have been in conversation [with energy companies] for a long time, particularly since Labor announced that they don't support the gas industry," the Country Liberals leader said.
"There have been significant concerns within the gas industry, from an Australian point of view and a Territory point of view, that Labor is prescribing an issue in regards to sovereign risk.
"They [Labor] are not providing certainty of investment."
But Labor leader Michael Gunner said the CLP had mishandled the tender process.
"If you wanted a 14-inch pipeline you had to pick someone who was going to build a 14-inch pipeline," Mr Gunner said.
"The CLP chose someone who made it very clear that a 12-inch pipeline was on the cards, and the CLP chose a timeframe that meant at the end of the day that Jemena could only build a 12-inch pipe."
(20min delay)