Passing gas: Challenging the pipeline myth


p2267-gas-pipelinesLETTER TO THE EDITOR
Sir – The proposed North East Gas Interconnector (NEGI) pipeline has been hailed as “a critical nation-building project” by NT Chief Minister Adam Giles, able to “put downward pressure on household bills” by NSW Premier Mike Baird and worth “big royalty dollars” by gas company CEOs.
But has anyone checked the facts?
• The project is important for solving the east coast gas “crisis”: There is no east coast gas crisis. The eastern states are producing more gas than ever before and this is set to increase in the coming years. This is clearly shown in industry publications and is acknowledged by the Australian Energy Market Operator.
• The NEGI will reduce household gas prices: Australian domestic gas markets are now linked to world prices. Any production facilitated by the NEGI would have a minimal impact on world supply and therefore on Australian domestic gas prices.
• The NEGI is important for NT government revenue: The NEGI is likely to make very little difference to the NT government’s revenue. At present, royalties from all mining, petroleum and gas extraction makes up only 2.9 per cent of the NT government’s revenue, $164 million out of a total $5,716 million in 2014-15. The NEGI will not make a significant change to this.
• The NEGI will bring jobs and infrastructure to remote areas: The gas industry is highly capital intensive and does not make many jobs once infrastructure is constructed. At the time of the 2011 census just 159 Territorians worked in the oil and gas industry. Service industries are the big employers of the Territory economy. There is no incentive for gas companies to build any roads that they do not need and beyond the construction period they will not need to use those very often.
This year’s NT budget features a $9.2 million subsidy to the NEGI, while from 2008-09 to 2013-14 $406 million dollars was spent on measures that assisted these industries.
“There’s a lot of hyperbole around the NEGI, but in reality it will benefit gas companies, not Territorians or east coast households.
Government investment in infrastructure around the NEGI should be subject to rigorous assessment. The Territory government has a track record of subsidising the mining and gas sector.
The NEGI’s potential contribution to jobs and NT government revenues is small, while the potential for government subsidy is high. NT taxpayers should keep their hands on their wallets when they hear big claims about this project.
Rod Campbell
Research Director, The Australia Institute
[ED – The Alice Springs News Online is asking Mr Giles for comment.]


  1. Very interested to read that mining only contributes 2.9% to our revenue. The way the NTG pander to the mining companies one would think it would be a lot more.
    Territorians might be interested to read that we have given $9m out of our Budget to this, given a few years ago the CLP took a chainsaw to many of our NGOs including mental health, youth services and of course environmental organisations.
    Many Territorians are doing it tough with very few support services to turn to. When this idea was first floated Giles said he was interested to hear if it would be supported by Territorians, that there would be consultation first.
    Next minute we’ve allocated $9m to the project. I’ve come to realise when the CLP speak of consultation they really mean they will ask their mates what they think. I’ve always viewed this as Giles’s pipe dream and now here is some proof.

  2. The Mayor, the Town Council CEO and I met with one of these groups on Wednesday when they enthusiastically presented their project to council.
    Their proposal is fully costed all the necessary construction partners on board, very enthusiastic and ready to go, should they be lucky enough to be given the green light.
    And yes, they are ready to go on the back of existing supplies, and yes, they have a ready market, and yes, of course the project is financially viable even at today’s prices, with no tax payer input. Privately financed.
    Yes, the Territory receives a wellhead royalty which adds up to a whole lot more revenue than doing nothing.
    The massive 1000 kilometer pipeline to Moomba will directly employ hundreds, many more indirectly in its construction phase and eventually somewhere around 30 full time jobs once completed.
    The actual construction will be undertaken from Alice Springs, the town standing to do very nicely indeed out of this stage of the project.
    The completed pipeline will have the ability to send gas in either direction to or from the east coast.
    And yes, all are aware that the world economies are wrestling with future energy types and supplies, hopefully moving into renewables at sometime in the future.
    However, this is not going to happen overnight. This project reckons it has at least a twenty year window of opportunity and have costed their project around it.
    Meantime like it or not, gas is one of the cleanest options we have available.
    Blindly stupid attempts to sabotage its use by the likes of Mr Campbell would if successful see your electricity bill escalate enormously over the next 50 years until some fully viable replacement fuel is found.
    Are you ready to turn off? Join Mr Campbell and the dread-locked crew in a return to the Dark Ages? If you, like me, are pretty keen on your technology and lifestyle, get behind this project and others like it, because we need them they don’t just create jobs and royalties they provide you with electricity! At a price you can afford!
    [ED – Cr Steve Brown is the Deputy Mayor of Alice Springs.]

  3. A pertinent question is: “Where does the Australia Institute get its funding?”
    Recently the NSW Minerals Council CEO Stephen Galilee says the Australia Institute is another branch of the ­environmental movement.
    “They are a de facto extension of the Australian Greens Party, extensively involved in campaigns around the nation while calling themselves a think tank.”
    “They should be honest and upfront and admit they are a political organisation masquerading as a think tank.”

  4. Re Steve: Sounds like a puppy wagging its tail to get a pat.
    This person was voted as Deputy Mayor as half of the council were watching a doco about climate Change.
    God help Alice Springs.
    He’s now guaranteed electricity prices that the town can afford.
    Small fish, big pond comes to mind.
    Given that bottled gas is now almost three times the price of piped gas, another pipeline dream by the town’s One and Only.

  5. Alex, don’t you get it? We have to put the gas through the pipeline because the bottles wont fit! LOL. By the way, I’m quite happy to be a small fish in a big pond Alex. What’s your status, I wonder.

  6. Good stuff – I don’t think the NT Government has commissioned any serious economic modelling of the flow-on effects to the regional economy of a gas production industry as opposed to other possible future industries.
    If we want to connect into Australian or global energy networks then high voltage direct current transmission makes much more sense than a gas pipeline.
    It can pick up multiple energy sources along the way rather than backing one energy source (gas) which is oversupplied and likely to crash at some point leaving a stranded asset and a big scar on the landscape.

  7. I think that people need to declare a conflict of interest when becoming involved in these discussions.
    I especially think that town councillors that are also developers and stand to benefit from any sorts of developments like this should exclude themselves from the conversation and not get to vote during council deliberations.
    Yes, getting part of a fat contract building a pipeline or whatever may be great for the developer / councillor but that doesn’t necessarily mean its good for the rest of the community.

  8. I would have to say the best thing to do is build a power station at the well head.
    The return would be a lot more profitable than a pipeline. One would have to agree with Dr. Wrongo. I am critical about about Steve Brown’s comments, as the Alice Springs council were not able to send the correct rates out. In dollars and cents what are the Teritorians going to get out of this.
    The gas development in Darwin has not been as successful as first stated.


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