By Frank Tudor, Managing Director, Jemena
The Australian energy industry is at an important crossroads. Deciding which direction we take will play a significant role in ensuring our energy future and security.
Rising prices, lack of availability, and policy uncertainty are heaping pressure on customers, industry and governments.
And because projects can take five, ten or more years from conception to delivery, any delays in the decision-making process now will negatively impact customers over the long term.
Therefore, in order to map out our future, we have to make strong and decisive decisions – and quickly.
To support our collective decision making, we should take confidence from recent developments that demonstrate Australian capacity, ingenuity, and appetite to locate, extract and transport gas from remote locations to areas of demand.
The Northern Gas Pipeline (NGP) is a good example of how an engineering challenge has become the first step in providing the missing link to alleviating east coast gas issues. The project may have been completed but the opportunity to leverage off its momentum is just starting. Failing to capitalise on this could have dire consequences.
Northern Gas Pipeline brings commercial value
Jemena tendered for the Northern Gas Pipeline project in 2015 when my predecessor Paul Adams, and the Board, had the foresight to recognise an opportunity. It was part of a long-term vision to deliver abundant and affordable gas to the east coast.
At 622km, it was an ambitious project for the company, especially as it also included the construction of a gas processing plant and two compressor stations, at Tennant Creek in the Northern Territory and Mount Isa in Queensland.
We also took the unusual step of commencing construction with only one third of the capacity contracted. This is unusual in the pipeline infrastructure business where, in the majority of cases, construction only begins when contracts have been guaranteed.
However, we were so convinced the pipeline was necessary national infrastructure that we adopted the ‘build it and they will come’ approach.
The pipeline was built over a 17-month period and in December last year, we officially celebrated the completion of the construction phase, which was followed shortly afterwards by the commencement of commercial operations.
Two launch events were held just before Christmas, one at Tennant Creek in the Northern Territory and the other at Mount Isa in Queensland. They were attended by members of the Federal, Northern Territory and Queensland governments, Traditional Owners, landowners, stakeholders and media.
We were particularly proud the events were also attended by members of the local communities along the route who actively participated in the project. More than 265 contracts, worth in excess of $52 million, were awarded to small business in regional Australia, and more than 1100 jobs were created through the NGP, including nearly 400 roles for people from local communities surrounding the pipeline route.
The NGP will deliver approximately 90TJ of gas to industry across Northern Australia, including to Incitec Pivot Limited’s operations at Phosphate Hill and Gibson Island, underpinning around 1500 regional jobs.
There’s no doubt that constructing the NGP was a physical challenge. Conditions were tough with hot, dusty weather in the dry season and heavy rains during the wet. Managing the safety of the workforce, logistics and working conditions was not easy, but with good planning, training and sensible work practices we achieved what we set out to do.
A line in the sand
As we reflect on the completion of the NGP build, it has also become clear the pipeline is more than a feat of engineering, it is also a statement of intent.
When Jemena, governments, Traditional Owners and stakeholders agreed to the project, we were also taking a deliberate decision to back gas as a long-term, viable and credible energy source in Australia.
Turning the first sod was symbolic, because we quite literally crossed a line in the sand to support domestic natural gas as an answer to the nation’s energy security, and an answer to the energy trilemma of reliability, affordability and sustainability.
For us, the NGP is the missing link and now commercial gas is flowing, we are more confident than ever that developing national infrastructure is the way forward, and what’s more, we can see how the next phase of this could shape up.
We already have one eye on the future and are planning for the pipeline’s expansion and extension – all the way through to South East Queensland.
Subject to the successful exploration and production of gas in the Beetaloo Basin in the Northern Territory, Jemena would be well placed to deliver more than 700TJ of reliable, low-carbon, and affordable gas to the east coast – enough to support the domestic gas markets of Sydney, Brisbane and Adelaide combined each day.
Not only would this go a long way to solving the east coast gas shortage, but it would also alleviate pressure on other gas markets.
By bringing more gas into the system as a whole, we can also free up additional gas for use across other areas of the domestic market, particularly for those markets in the southern states of Victoria and South Australia.
While the upstream gas companies explore for gas, we are getting on with planning and preliminary work to transport it. This includes significant consultation with Traditional Owners, landowners and the community – just as we did across the NGP’s planning and construction phases.
We are working on a number of scenarios, depending on when and where fields open up, however a likely next step for us would be connecting the Galilee Gas Basin to the existing hubs in South East Queensland.
If this option was to be realised, we envisage the subsequent stages would include extending the pipeline between Mount Isa and the Galilee Basin, as well as expansion of the new Northern Gas Pipeline, in what would be significant national infrastructure across Northern Australia, resulting in a fully integrated network of approximately 1800km.
Domestic gas supply
Jemena is a diverse business and in addition to building critical infrastructure, we also deliver gas directly to homes and businesses (among other energy solutions).
We own and manage the Jemena Gas Network (JGN) in New South Wales, and at close to 1.4 million customers, it is the largest gas network in Australia – and growing rapidly.
A record 62,000 new customers were connected during 2018, which is an increase of 15 per cent on the previous twelve months.
This gives us confidence that bringing more gas to the east coast market via the NGP and other future pipeline projects will not only support end-user energy needs, but it will also bring prices down for them.
For business and industry in the Northern Territory, Queensland and New South Wales, more plentiful gas will lower feedstock and fuel prices leading to more opportunities to create jobs, grow and be more competitive. For homeowners across the JGN, it means cheaper gas to heat homes, and run cooking and hot water appliances.
As well as better affordability, we also know customers want greener gas as Australia transitions to a carbon neutral energy system. In line with Gas Vision 2050 and our international commitments to reduce emissions, we are utilising technology to test new ways to drive maximum efficiencies from our gas network and bring customer costs down.
In partnership with the Australian Renewable Energy Agency (ARENA), we have commenced a $15 million trial to test our network’s capacity to be repurposed to store hydrogen gas.
Hydrogen is carbon neutral and can be sourced from renewable energy. We estimate that in the future, the JGN could store as much energy in the form of hydrogen as eight million Powerwall batteries, without further investment in the network.
Our aim is for Sydney homes and businesses to be able to use this green gas in as little as five years for cooking, heating and hot water.
Recent political and policy discussions have focused on coal and renewables in particular, meaning gas has been put on the backburner, so to speak.
But gas is a viable solution to the energy trilemma, national fuel security, and can help to address rising east coast demand. If we are to maximise our abundant natural reserves, we need to move now. The time for talking is over.
We have a good idea where the gas is, so let’s support industry to find and extract this. The sooner we begin, the sooner customers (both small and large) will benefit.