Northern Gas Pipeline pinch for Mount Isa

Mount Isa industry is facing a 'double whammy' on gas supply as Northern Territory output falters, according to producer Central Petroleum. The mining hub is being cut off from a key source of gas, with Northern Gas Pipeline flow halted for months, and may soon be competing with the NT to tap a tightening East Coast supply. The Northern Gas Pipeline, which transports gas from production facilities in the NT to demand centres in Mount Isa and other areas of eastern Australia, has been out of action since last month and is expected to remain that way until at least June. Central Petroleum managing director and chief executive officer Leon Devaney said the problem was that the NT was no longer producing enough surplus gas to keep the pipeline running east and was looking into reversing the flow instead. "The Northern Territory has historically been oversupplied largely because of significant volumes coming out of the Blacktip field, which is an offshore field supplying the NT market, and also our (Central Petroleum) assets in the Amadeus Basin have been supplying the NT market," he said. Related: IPL facing $90m hit from Phosphate Hill gas shortfall Jemena's Northern Gas Pipeline was built in 2019 to direct that surplus gas to customers outside the NT. "What's changed is over the past two years, but in particular over the past six to nine months, the Blacktip field has declined dramatically. And that decline was unexpected," Mr Devaney said. "Where we're at now is that the NT doesn't produce enough surplus gas to extend through the NGP to keep it operational. The NGP needs about 20 TJs a day to keep it operating safely." The two slides above from a Central Petroleum presentation illustrate the dynamics of the NT gas market. Central Petroleum sells gas to major customers in Queensland via the NGP including South32 Cannington, Incitec Pivot and Shell, as well as selling into the spot market at Wallumbilla. Mr Devaney said such customers were able to source gas elsewhere. But as the Australian Energy Market Operator’s 2024 Gas Statement of Opportunities (GSOO) released yesterday showed, the East Coast market was increasingly short on gas, particularly during peak periods. Related: Gas supply warning bells, diesel looming as a stopgap The Northern Gas Pipeline. It was becoming harder and harder to buy gas at a price customers considered reasonable, he said. "The big change is that once you lose the NT as a gas supplier, the supply of gas in the East Coast, particularly the northern part of the East Coast, goes down," he said. "But probably just as significant is if the NGP were to reverse and the NT starts importing gas from the NGP, then it is actually another customer competing against your Mount Isa customers there. "So they're all vying for that East Coast gas. So it's sort of a double whammy. It reduces the supply into Mount Isa, but it also - on a reverse flow basis - means there's another customer competing for gas at that point." Australian Energy Producers Queensland director Keld Knudsen. Australian Energy Producers Queensland director Keld Knudsen said the issue highlighted the need to bring on new gas supply across Australia to ensure energy security and put downward pressure on prices, especially in regional and remote areas. "Whether it’s the Beetaloo Basin in the Northern Territory or new supply in Queensland, New South Wales or Victoria, we should be bringing on new gas supply and growing the pie, not cutting it," he said. "The recent announcement of restrictions of future gas supply from the Lake Eyre Basin will remove the nearest source of gas to Mount Isa and has already undermined East Coast energy security. "Mount Isa is an important regional hub and has multiple customers for gas – including power generation and manufacturing – and the industry is working tirelessly to get the gas to where it needs to go." Image at top of page: Central Petroleum gas infrastructure.

Northern Gas Pipeline pinch for Mount Isa

Industry Queensland

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