Lighting up the north

Gas operator Jemena closed 2015 with a bang, cinching the coveted operator contract for the 626 km Northern Gas Pipeline, one of the biggest gas infrastructure projects in recent history. Gas Today spoke to Project Director Jonathan Spink about how Jemena won the bid and how the pipeline will open up Australia’s northern gas export market.

The pipeline formerly known as the North East Gas Interconnector, or NEGI, will open up the Northern Territory’s southern gas basins for development and greatly aid in the economic expansion of Australia’s northern state.

Jemena, which is owned by State Grid Corporation of China and Singapore Power, beat operators APA Group, DDG Operations (DUET Group) and Pipeline Consortia Partners Australia (China National Petroleum Corporation),

The shortlist of proposals was split between a southern line, which would have run between Alice Springs and Moomba, and a northern route, running from Tennant Creek to Mt Isa, with two companies pitching for each.

After much consideration the Tennant Creek to Mt Isa route was selected, although the decision was not without its critics, though, which included government and gas companies in southern states, particularly South Australia.

According to Project Director Jonathan Spink, the selection of the northern route was because of its greater feasibility and lower cost and risk profile. “It’s the shortest distance being 622 km, and in terms of risk you’ve got good road access the whole way, you’ve got access to both rail heads on either end, you don’t have sand dunes, you don’t have national parks, and you don’t have wetlands.”

Having easy access allowed Jemena to get a head start on surveying and inspections, which were required during the bid phase.

“[Jemena] staff and the surveying subcontractor staff were all out there on the ground and able to do survey work and to put forward our environmental applications very early. The southern [route] proponents hadn’t been able to do that.

“It meant we were able to quantify the risk a lot more than the southern route; there’s no way that those projects could have been delivered in the timeframes that were required for the project. The risk around it meant it was going to be harder to deliver it.”

Big plans

While the pipeline is very early on in the development phase, Mr Spink has said that demand has been extremely high.

“A lot of people are interested putting gas into the pipeline. We have got a 14 inch pipeline at the moment, but the plan is to get it bigger; we have put a hold on the line pipe production starting until after April 2016.

“We are giving producers a few more months to tell us how much gas they actually want to put into the pipeline. At the moment the 14 inch line should be comfortably filled; however if we can put in an 18 inch line, it means we are not going to have to loop in a couple of years’ time, and it means everyone should get a reduction in tariff which benefits everyone.”

In terms of connectivity and how the Northern Gas Pipeline (NGP) will enhance competition in the market, Mr Spink says that by being awarded the operatorship of the NGP, Jemena will bring some welcome competition to the market.

“APA Group has been the biggest gas company in Australia, and I think having someone else win this pipeline is good for the market. It means we are a competitor up here in the Territory now. Producers and shippers have an option as to where they want their gas to go.”

Another driving force behind Jemena’s successful bid has been its new owners in the State Grid Corporation of China, according to Mr Spink.

“Our owners really want to invest in Australia. The market is a little bit quiet at the moment after the oil price slump, and so Jemena needed to expand. We have been wanting to expand for a couple of years but this is the first big chance where we could see a chance to interconnect to the east coast pipeline grid really well.

“The NGP is the initial link, then we plan to connect from Mount Isa through to Wallumbilla. It will then connect with the hub at Wallumbilla, then potentially go up one of the LNG pipelines, or go via the Queensland Gas Pipeline.

“It is all about trying to interconnect that grid and to create a market reliability and a national grid approach but with options for producers and shippers too. There’s a bigger picture at play, which is also why we are trying to get this 18 inch line going; it makes the next step much easier.”

McConnell Dowell to construct

The project’s construction contract was awarded to McConnell Dowell who, according to Mr Spink, were heavily involved in the bid process.

“During the bid phase we ran an expression of interest very early to pick a constructor which we could work with under an early contractor involvement model.

Having never worked with McConnell Dowell, Mr Spink said that Jemena was very pleased with the results of the two groups’ early work together.

“One of the other winning factors for us was the strong integration of Jemena’s team and McConnell Dowell’s team. Jemena’s approvals and design ended up being based out of McConnell Dowell’s office. It made it a fairly seamless process with a good sense of team.”
Land access key

The new land access regulations in the Northern Territory and new best practice models in Queensland meant that having strong land access credentials was absolutely critical to Jemena’s success as the winning bidder.

Jemena worked with environmental subcontractor Maloney Field Services to ensure the way the bid was approached was consistent with these new rules, and rolling out the latest strategy for land owner engagement.

“During the last phase [Jemena] met multiple times with all of the land owners and developed a landowner line list, so it’s really about upfront engagement. There’s a lot of cattle properties in the area so it’s really important that we work within their requirements on their land,” Mr Spink said.

“I’m pretty happy with the practices we have adopted, I’m comfortable they align with the new report.”

“That’s something that has been reinforced to us by a lot of the government departments and land owners in the Northern Territory – just how good our stakeholder engagement was. We put a lot of the work into our engagement with local business and local industry; we really put a lot of effort to making sure this was a Territory project and that the its people benefit from it.”

Mr Spink predicts employment of around 900 people – 600 of which will come from the local area.

People and employment

In terms of accommodation, Mr Spink has advised that workers will be accommodated in town at Tennant Creek and Mount Isa, close to the compressor stations at either end of the pipeline.

The pipeline will also have five camp locations, with three camps that will leapfrog to house staff along the line. Jemena has identified locations for the camps and is currently going through approval processes for those camps.

For employment and subcontractor opportunities, Mr Spink says that people can register interest on the Industry Capability Network or by contacting Jemena.

“[Jemena] is trying to involve local businesses as much as possible, particularly around Tennant Creek. We are going to do a lot of work around that area and set up some good initiatives to give the locals a hand to make sure they can tender to the quality required for a big project like this.

“We are doing a few special things with ‘work ready camps’, trying to upskill some of the locals who might not have the skills for these sorts of things so we do leave a legacy in the Territory. We will work with some of the Aboriginal groups in the area as well. Hopefully the Jemena name will be one people think of fondly.”

Next steps

The company has predicted construction to begin in the dry season of 2017, having already begun sending out permission requests for the Environmental Impact Statement to develop terms of reference and the pipeline licence application. The Environmental Protection Authority has already approved the project.

Once construction is completed in 2017, the compressor stations will start and should operate for a full year, and from there Jemena expects to be operational in around July 2018. The value of construction work is expected to exceed AU$300 million.

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