"kicking the tyres" supply deals from the BeetalooI'll admit I'll very optimistic over FO at this point in time. The first Hz well will be fracced in the next month and the step out exploratory well will be completed and logged. But, here's the icying on the cake: NG pipelines. Jemena sees NT pipeline as core for $2b northern gas investment
China-controlled Jemena intends to use wining the contract to build the North East Gas Interconnector as a springboard for a possible $2 billion or more of investment as it creates a third leg for its gas transportation business.
Managing director Paul Adams signalled Jemena was considering investments of $1.2 billion or more in addition to the $800 million NEGI pipeline, which will connect Tennant Creek in the Northern Territory to Mt Isa in Queensland.
Jemena MD Paul Adams says the company is considering more pipeline investments in the north. Photo: Glenn Campbell
Mr Adams said Jemena's owners, State Grid Corporation of China and Singapore Power, were taking a long-term view of the potential of supplying gas from the NT, which he said offered "huge" potential supply to meet demand on the east coast.
The 622-kilometre NEGI pipeline, confirmed as a concrete project by the NT government last month and due to start up in 2018, will open the door for the supply of NT gas to other markets.
Mr Adams said Jemena saw an opportunity to extend the new pipeline from Mt Isa down to Wallumbilla, a central hub for gas in south central Queensland, at a potential cost of "a lazy bill [billion dollars]".
It could also decide to make NEGI bigger if supply and transportation contracts are signed before April-June 2016 when decisions needed to be made to start construction. That would increase capacity from 120 terajoules a day to more than 200 TJ/day at a cost of "another few hundred million" dollars.
Mr Adams said potential customers were already "kicking the tyres" of possible supply deals from the Beetaloo Basin in the NT and other areas.
He said Jemena was able to beat competitors such as dominant local pipeline owner APA Group in the tender to build the pipeline because the company was regarding the NEGI pipeline as the core asset to build a new northern gas business, rather than as a standalone asset.
"We have east coast gas, we've got Queensland gas and we see the northern market is moving and that's why we're calling it the Northern Gas Pipeline because we see it being more than just an interconnect," he said in an interview.