Jemena has signed a new gas transportation contract with Santos to ship around 8TJs of gas per day across the $800 million Northern Gas Pipeline (NGP).
Gas transported as part of the agreement will be used to provide energy for local mining and mineral processing operations in the Mount Isa region.
The new agreement means around 80 per cent of the NGP’s total available capacity in year one of operations has now been contracted.
Jemena executive general manager of corporate development Antoon Boey said the new contract reinforces the important role the NGP will play in supporting jobs and communities in regional Australia.
“Today’s announcement proves strategic investment decisions like the NGP can help to mitigate forecast gas shortages while bolstering local industry and strengthening the Northern Territory’s growing gas credentials,” Mr Boey said.
The agreement comes after Jemena announced it had signed a contract with Incitec Pivot Limited (IPL) to deliver 32TJs of gas per day to IPL’s Gibson Island facility in Queensland.
This facility employs around 400 staff during normal operations and up to 800 staff during peak periods.
Mr Boey said the new agreement would see Jemena transport gas for three years from the first day of commercial pipeline operations for Santos.
“This agreement provides more much-needed gas to the mining and processing sector in the Mount Isa area, and is a positive for the local community, who will benefit not only from jobs which rely on gas as a direct feedstock, but from the flow-on effects of having a vibrant local economy and industry,” Mr Boey said.
Santos managing director and CEO Kevin Gallagher said the deal was a great example of how Santos is collaborating across the supply chain to make domestic gas available where and when it is needed, efficiently and at competitive prices.
“This is a great commercial outcome for all the parties involved and it is also good for the east coast domestic gas market, connecting the Northern Territory into this supply grid,” Mr Gallagher said.
“It’s absolutely critical we continue to open up new gas supply sources to service the domestic market as existing, mature fields decline.”
Construction of the NGP continues to track to schedule with first gas set to flow in late 2018.
The agreement follows Jemena’s announcement it has signed an agreement with Senex Energy to build, own, and operate the Atlas Gas Processing Plant and Pipeline, connecting Senex’s new ‘Atlas’ gas field in the Surat Basin in south-east Queensland with Jemena’s Darling Downs Pipeline and the Wallumbilla Gas Hub – the largest gas hub in the country.