Independent Senator Nick Xenophon says a $1.2 billion gas pipeline from the Northern Territory to South Australia could help solve the nation's energy crisis.
On Friday the federal government struck a deal with the Nick Xenophon Team on company tax cuts in exchange for a feasibility study into the north-south pipeline from central Australia to Moomba.
Senator Xenophon said Australia has abundant supplies of gas yet it's being sold on overseas markets at a fraction of the cost of what locals pay.
"We've really stuffed this up as a country ... Australian consumers and Australian businesses are paying twice or three times the price of gas than the US," he told ABC radio.
"I've got businesses in South Australia that are telling me they won't be around in a couple of years' time if gas prices keep going up."
The commonwealth is prepared to fund the project, subject to national interest tests and a temporary ban on hydraulic fracturing being lifted.
But the NT government says the fracking moratorium will continue pending an inquiry into the effects on ground water.
Senator Xenophon would support unconventional gas exploration in the NT if it had independent scientific approval and long-term monitoring.
"I'm sure that there are places where you can tick all the boxes in terms of rigorous environmental standards," he said.
"(But) until we have that feasibility study we'll never know whether it's worth going ahead with."
Senator Xenophon didn't rule out a gas reservation policy and said the study would need the backing of both the NT and SA governments.
The NT Lock the Gate Alliance said in agreeing to the proposal Canberra was disrespecting Territory pastoralists, tourism operators and traditional owners.
"Large scale industrial fracking projects are not the answer to the Territory's economic woes if they are going to put other Territory industries in jeopardy," spokesperson Naomi Hogan said.
