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The role of gas in Australia’s energy market is a hot topic right now, with the Federal Government throwing its support behind the development of more gas assets. Energy infrastructure company, Jemena, is embarking on two gas pipeline extension projects: the Eastern Gas Pipeline (EGP) extension and the Northern Gas Pipeline (NGP) expansion.

Eastern Gas Pipeline project

In September 2020, Jemena announced it was developing plans to extend its 797km Eastern Gas Pipeline (EGP) by around 185km from Horsley Park in Sydney to the Hunter Valley, helping to further integrate Newcastle and the Central Coast into the east coast gas grid.

The project will not only help to connect the Hunter Valley to the domestic gas field, but also connect it to the proposed LNG Port Kembla Gas Terminal (PKGT).

The extension to the EGP is expected to be able to deliver upwards of 300TJ/per day to the Hunter Valley, which can then be used to generate approximately 1,500MW of electricity. Jemena said it expected to invest over $400 million into the extension project.

In late November 2020, Australian Industrial Energy Pty Ltd (AIE) signed a Memorandum of Understanding (MOU) with Jemena to connect the EGP with the proposed PKGT, which is on the Government’s Priority Project List. The project will involve the construction of a 12km underground pipeline that will be able to transfer gas directly from the PKGT into the EGP.

Jemena also plans to invest over $70 million to modify the EGP and construct a separate connecting bilateral pipeline which will enable 200TJ of gas to be delivered from NSW to the Victorian market, in addition to being able to supply up to 450TJ of gas to NSW per day (equal to a 25 per cent increase on current capacity).

Northern Gas Pipeline project

In November 2020, Jemena announced that it signed a Memorandum of Understanding with Tamboran Resources Limited, which holds 25 per cent of Santos’ exploration venture for the Beetaloo Basin, and subsequently acquired 100 per cent of Sweetpea’s Beetaloo acreage.

This MOU is the next step in the proposed $5 billion+ expansion of Jemena’s Northern Gas Pipeline (NGP), with plans to progressively increase the NGP’s capacity from around 90TJ of gas per day to 1,000TJ through a combination of compression and looping.

Following this, the NGP will be connected to the proposed Galilee Gas Pipeline, which will span around 585km and will transport gas from Galilee Energy’s Glenaras Gas Project near Longreach in the Galilee Basin to the Wallumbilla Gas Hub.

Jemena said that it expects to be able to transport up to 200TJ of gas per day via the NGP from 2025, with transport quantities increasing as pipelines are extended and expanded from the second half of the 2020s.

Expansion helps grow the Australian gas market and economy

Jemena’s Managing Director, Frank Tudor, said that the extension and connection of the EGP to the PKGT would have positive benefits for the Victorian and New South Wales gas markets, allowing for greater flexibility, while also placing downward pressure on prices.

“Our plans to invest in gas infrastructure across the country’s north and south are part of a long-term strategy to shore up Australia’s gas markets by bringing much-needed – internationally competitively priced – additional gas to market,” said Mr Tudor.

“We have advanced plans to connect the proposed LNG import terminal at Port Kembla to the Eastern Gas Pipeline, while also making the EGP bi-directional. Together, these plans will enable us to flexibly deliver gas to both the Victorian and New South Wales markets in response to shifting demand profiles.

“It will also facilitate new gas coming to market to offset declining supply from gas fields off the Victorian coast, while also connecting east coast supply to global LNG pricing, noting that gas imports are cheaper in the Australian winter because it corresponds to the northern hemisphere summer, which is traditionally the low demand season for LNG.

Mr Tudor said that Jemena anticipates it will be able to transport additional gas supplies across the NGP from 2025 onwards with construction of the extension to commence approximately 18 months before this anticipated timeframe. Additionally, Jemena anticipates commencing work to connect the EGP to the PKGT later in 2021.

Supporting the Federal Government

In addition to helping bring new gas to market and putting pressure on prices, Jemena’s Eastern Gas Pipeline and Northern Gas Pipeline projects help to support the Federal Government’s gas-fired pandemic recovery.

In September last year, the Federal Government announced details of its gas-fired recovery in response to the COVID-19 pandemic. As part of that plan, the Government announced plans to develop five strategic gas basins, including the Beetaloo Basin.

“We see the expansion and extension of the NGP as a crucial step in providing a pathway to market for gas from the Beetaloo Basin, which in-turn will help deliver on the Government’s gas-fired recovery plans.

In keeping with this, in November 2020 we announced details of a Memorandum of Understanding with Tamboran Resources Limited, the holder of premium acreage in the Beetaloo Basin.”

The partnership between Jemena and Tamboran highlights the importance of collaboration in the industry and represents a key milestone in Tamboran’s goal to bring new supplies of natural gas to eastern Australia by 2023-24 and creates a pathway for the other Beetaloo producers to cost effectively transport their gas.

Infrastructure for a post-COVID world

Jemena’s aim with these projects is to build infrastructure that will be able to support and assist in delivering the gas-fired recovery plan.

Jemena considers that gas will have a crucial role to play as a key part of the changing energy system as the economy moves to meet global targets on decarbonisation, playing a key role in firming and energy security, and as a feedstock and energy source to the manufacturing industry.

“Our aim is to build the right infrastructure solutions so that we can deliver on the government’s ambitions as part of a gas-led recovery from COVID-19, while also addressing the growing demand for energy on the global scale,” Mr Tudor said.

“We consider that there are three, potentially four, gas markets in Australia: northern, southern, western, and an export market. While these markets are capable of acting independently, the northern and southern markets are loosely connected.

“The infrastructure solutions we are proposing are in response to declining supply across those markets, particularly the northern and southern markets, and we believe our projects are the best way of bringing new gas to market quickly, efficiently, and economically.”

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