Fertiliser company Incitec Pivot Ltd have signed two landmark deals to pipe Northern territory gas via Mount Isa to its Brisbane plant at Gibson Island.
The gas will come from the Mereenie fields west of Alice Springs and will get to Brisbane via APA’s pipeline to Tennant Creek, then Jemena’s Northern Gas Pipeline to Mount Isa, before resuming its 3,300km journey on APA pipelines to Brisbane.
APA told the ASX the project was contingent on the start of commercial operations of the Northern Gas Pipeline, due later this year.and the agreement was for an initial term to the end of 2019, with an extension option.
As part of the deal, Central Petroleum will deliver 20TJ of gas from its Palm Valley and Mereenie fields near Alice Springs to IPL.
The gas will then be transported on APA’s Amadeus Gas Pipeline at Mereenie to Tennant Creek then transported via Jemena’s Northern Gas Pipeline, to enter APA’s East Coast Grid at Mount Isa.
It will travel via the Carpentaria Gas Pipeline to Ballera, the South West Queensland Pipeline to Wallumbilla and the Roma Brisbane Pipeline to finally reach IPL’s plant near Brisbane.
APA Managing Director Mick McCormack said IPL was a foundation customer with an almost 100 year history of manufacturing in Australia.
“APA is pleased to have been able to help make this deal happen, not only through our investment in developing the East Coast Grid over many years, but also because we have worked very closely with IPL to understand and then meet their needs by providing services in a market which is currently in tight supply,” Mr McCormack said.
“This unique and innovative solution for IPL will help see the Gibson Island plant continue to operate and contribute to the Australian economy, importantly maintaining jobs for Australians.”
Jemena said their gas transportation contract was worth $800 million and they will transport at least 32 TJs of gas per day and adds to its 2015 agreement with the Northern Territory’s Power & Water Corporation to transport 31 TJs of gas to IPL’s Phosphate Hill facility for 10 years.
Jemena’s Acting Managing Director Antoon Boey said the deal reinforced the leading role the Territory’s gas industry can play in creating and sustaining jobs in northern Australia.
“We have had a fantastic relationship with IPL, and are thrilled this additional gas will support IPL’s operations on Gibson Island, which employs a workforce of over 400 staff during normal operation and up to 800 staff during peak periods,” Mr Boey said.
“This gas gives much-needed certainty to Incitec, and is a positive for the people relying on the Gibson Island facility, 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.”
The announcement means Jemena has contracted volume on the NGP to 70% of what will be its total available capacity in year one of its operations.
“Discussions with other parties are also well advanced, and we remain confident that NGP will be fully contracted by the time it is operational later this year” Mr Boey said.
He said the NGP’s construction continued to track to schedule, with first gas to flow late this year.