Oz Mereenie Gas Project Greenlit

The Australian Mereenie joint venture has decided to go ahead with the development of its gas project in the Northern Territory following a decision earlier in the month  by the country’s competition watchdog to allow joint marketing of the fuel.

It hopes to complete the work in time for the opening of the Northern Gas Pipeline later this year, JV partner Central Petroleum said March 12.

“Ideally the plant upgrade decision should have been made in February to ensure the work was completed by the time the NGP became operational,” Central Petroleum CEO Richard Cottee said.

“But Central was never, nor should it be, in control of regulatory approvals and while it will be tight, Central, as operator, will use every endeavour to ensure the Mereenie processing plant has the capacity to sell 58 TJ/day of Sales Gas by the end of this year,” he said.

On March 2, the Australian Competition and Consumer Commission announced a draft decision to allow Central and fellow 50% JV partner, Australia’s largest investment bank Macquarie Group, joint marketing under the reasoning that the region has plenty of sources of alternative supply and that it will help encourage investment to allow for the gas to reach the tight gas market on the east coast once the NGP is operational.

The decision by Central and Macquarie to proceed confirms new drilling at the project and an immediate A$12mn ($9.43mn) upgrade of the processing plant. It is aimed at increasing its capacity from its present 25 TJ/day (9 PJ/year), of which 15 TJ/d are sold as gas into the Northern Territory market with the balance re-injected, to a new capacity of 63 TJ/d of which 58 TJ/d will be sold as gas without adversely affecting current crude oil production, Central said.

Central said that after the ACCC interim approval, in making the decision to proceed the JV took into account the following matters:

• The ongoing tight supply situation on the east coast with prices remaining at A$8/GJ-A$10/GJ citygate;

• Increased flexibilities in the system as a result of pipeline reforms;

• The pipeline reforms promising more internationally competitive tariffs;

• The work that Central has done on the Feed for the plant upgrade;

• And, the NGP likely being operational by December with an initial capacity of 90 TJ/d (33 PJ/y) of which about 32 TJ/d has been contracted.