By Lauren Barrett
AS THE nation’s northern gateway to Asia, or Asia’s gateway to Australia, Darwin is rapidly positioning itself as Australia’s major trading hub for the gas hungry region, delegates at this year’s South East Asia Australia Offshore & Onshore Conference (SEAAOC) heard.
More than 1000 industry representatives from the international oil and gas industry descended on the Northern Territory’s Top End in August to discuss the abundant trade and investment opportunities on offer.
While the conferences two-day agenda also zoomed in on the broader state of Australia’s oil and gas industry, the f lurry of resource activity occurring both onshore and in the Territory’s coastal waters set the perfect pretext for painting the NT as a place primed for industry expansion opportunities.
The conference’s keynote speaker, NT Chief Minister Adam Giles opened SEAAOC by painting a very upbeat picture of the NT’s prospects, specifically Darwin, which is closer to Asia than to any of Australia’s major capital cities
“In the year to March 2014, engineering and construction activity in the Territory increased by 41.6 per cent to $4.7 billion, the highest annual level on record,” Mr Giles said.
“This increase was driven by work on several local projects including the $34 billion Ichthys project.”
Mr Giles said the Northern Territory was taking a lead role in the development of Northern Australia, and was already capitalising on developing itself as the country’s gateway to Asia.
“The Northern Territory sees itself inside the Asian circle rather than being on the periphery of Australia,” he said.
According to Mr Giles, Asia accounted for more than 90% of the NT’s exports last financial year, pumping $6.4 billion into the economy.
The Territory is putting in place the key frameworks to spearhead its desire to strengthen trade and investment with Asia, with the government recently establishing an office of Asian Engagement and appointing Terry Mills as the Territory’s commissioner to Indonesia and ASEAN, to be based in Jakarta.
The Territory’s push to strengthen its bilateral ties with Asia come at a time when global demand for LNG is expected to almost double by 2025 and Japan, the world’s biggest gas importer, will be leading the world’s insatiable appetite for gas.
With shipments from Darwin to Tokyo only having to travel a distance of 3,000 nautical miles, equating to a nine day voyage, the Territory is at a distinct geographical advantage.
The Territory’s waters play host to ConocoPhillips’ Darwin LNG project, which has been sourcing gas from the Bayu-Undan field since 2006, as well as Inpex’s Ichthys’s project, on track to come online at the end of 2016.
“In total, the Northern Territory will soon be supplying 10 per cent of Japan’s annual LNG imports from Ichthys and Darwin LNG,” Mr Giles told delegates.
Marine Supply Base open for business
Many potential gas fields are being appraised off Darwin’s coast, with a series of recent discoveries justifying the Territory’s’ ambit ions to build a reputation as a major onshore gas processing hub and supply base for offshore oil and gas projects.
This aspiration was touted as one that was becoming a reality for the Territory at the opening of the new $110 million Darwin Marine Supply Base which coincided with SEAAOC.
While Darwin has provided MSB services on a smaller scale for the past 40 years, Mr Giles said the larger, purpose built MSB would help Darwin secure a bigger slice of maintenance and logistics work for offshore projects.
“Darwin is now the only port in the region that offers a full-service Marine Supply Base with capital city infrastructure, integrated logistics and a strategic location half-way between Australia’s richest oil and gas fields and Asian energy-hungry markets,” he said.
The MSB will be operated and managed by ASCO under a 20-year contract with the Territory government.
“Large operators including Shell, ConocoPhillips, Eni and Inpex have already indicated they will use the MSB and it is expected that interest from these companies and the presence of Asco as the operator will attract others,” Mr Giles said.
The MSB will ensure a quick turn-around for up to 1,000 rig tenders a year, freeing up common user berth space at Darwin’s East Arm Port.
“This will make the Port more efficient and productive which is critical to expanding trade with our Asian neighbours,” Mr Giles said.
East coast pipeline link in sight
The Northern Territory is estimated to have more than 30 trillion cubic feet of gas offshore.
However, there is also huge potential to tap into the Territory’s estimated 240 trillion cubic feet of gas reserves onshore.
“Onshore, over 85 per cent of the Territory is either granted tenure or under application for petroleum exploration with $130 million committed to onshore petroleum exploration programs from 2014 to 2018,” Mr Giles said.
While natural gas has the potential to become a game changer in many of the remote regions of the Territory, the ability to develop the reserves could assist in easing the East Coast’s predicted gas crisis by creating a pipeline to link.
“The volume of exploration underlines the fact the Territory has a significant role to play in Australia’s energy security,” Mr Giles said.
“We’re convinced that the Northern Territory should become a new provider of natural gas to other States.”
Gas transmission company APA Group is spearheading a $2 million feasibility study to assess the commercial viability of developing a pipeline link from the Territory to the East coast, working closely with State, Territory and Federal governments in the process.
New South Wales’ anticipated gas crisis has been widely documented over recent months, being compounded by the imminent start-up of Queensland’s LNG export industry later this year.
Taking the stand at SEAAOC, APA Group’s group executive transmission Rob Wheals said a new pipeline connection would encourage exploration and production to meet demand, opening up new markets in the process.
“We can create a seamless link between the Timor, Bass Strait, Gladstone and Sydney,” Mr Wheals said.
APA has narrowed the new pipeline down to three prospective routes, with the northern route going from Tennant Creek to Mt Isa, while another prospective option could go through Moomba which could link up to the Cooper basin.
Indicative costs of building a new pipeline and upgrading infrastructure are between $900 million to $1.3 billion.
“The most commercial pipeline route will most likely be determined by where the gas source located and to a lesser extent where the demand is,” Mr Wheals said.
The feasibility study on the various pipeline options is expected to be completed in the 2016 financial year.