Palm Valley gas royalties will resume


Royalties have temporarily stopped flowing to the NT Government and Arrernte traditional owners for gas from the Palm Valley fields west of Alice Springs, in the wake of reduced production.
After using Central Australian gas for some 25 years Power and Water Corporation (PWC) mostly switched to the Italian company ENI in 2010 which produces gas offshore in the Joseph Bonaparte Gulf.
Less than 10% of PWC’s needs continued to come from Palm Valley but this ended in January this year.
Merv Cowie, operations director of the Magellan Petroleum Australia Limited, which is the owner and operator of the field, says royalties – to the government as well as the Aboriginal interests – are paid on the wellhead value of the gas.
That is calculated by the revenue less production costs which at present exceed the revenue.
However, Mr Cowie says Magellan has a 15 year contract with Santos, production will be stepped up again next year and royalty payments are expected to resume.
Mr Cowie says the size of these payments are commercial in confidence but the government rate is 10%.
A spokesman for the NT Government says it does not release those figures.
The rate for the traditional owners is not being disclosed, says Mr Cowie.
He says the field has been in production for 28 years. As is usual for gas fields producing under their own pressure, it is highest at the beginning and drops as gas is removed.
The gas is delivered to Santos via the Amadeus pipeline which runs from Palm Valley to Alice Springs, Tennant Creek, Katherine and Darwin.
RELATED READING: Namatjira descendants look to their future


  1. Picture this scenario – it’s sometime in late January or February, and the weather is typically scorching hot with a run of daytime temperatures reaching the low 40s. Power consumption is at peak levels due to the air-conditioners in use all over town.
    Suddenly, without warning, an earthquake somewhere between Alice Springs and Tennant Creek ruptures the ground generating a fault line straight across the gas pipeline. The tremor is sufficient to puncture a hole in the pipe, causing it to explode. The supply of gas from the Top End is immediately disrupted.
    The question now is whether there is sufficient supply from the gas fields to the west of Alice Springs to meet the demand at this peak period of consumption while emergency repairs are made on the pipeline to the north.
    On January 22, 1988, there was a large quake that registered 7.2 on the Richter Scale, followed by a series of tremors of decreasing intensity over the following few days. The epicentre was about 40 km west of Tennant Creek, which generated a fault line rupturing the ground 25 km long, 35 km southwest of the town. It was a team of employees working for NT Gas, responsible for managing the Palm Valley to Darwin gas pipeline, that discovered the fault line.
    Initially there was no damage found but further inspection revealed the pipeline was kinked 60 km southwest of Tennant Creek, necessitating the replacement of that segment of line.
    This incident posed no problem for Alice Springs at the time as the main gas supply came from the Palm Valley fields west of town. But now that most of our gas is supplied from the Bonaparte Gulf in the Top End, should a similar or worse event occur any time in future, do we have sufficient reserves left to cater for this emergency?


Please enter your comment!
Please enter your name here