By ERWIN CHLANDA
The Territory’s $40 billon economy by 2030 “won’t happen without the growth of this sector” said NT Minister Mark Monaghan (at right), addressing more than 300 members of the extractive industry yesterday.
The other target with the same deadline – 50% renewables – never crossed his lips when he opened AGES 2024, the 25th annual conference in Alice Springs.
Mr Managhan said gas from Beetaloo is “on the cusp of changing the Territory forever” as Empire Energy and Tamboran Resources are expected to make their final investment decision on pilot production activities this year.
The Beetaloo Basin, about half way between Alice Springs and Darwin, is controversial because of the fracking there.
According to Ian Scrimgeour it is believed to contain more gas than the Ichthys field which is estimated at more than 12 trillion cubic feet (TFC).
The value of a one TCF contract delivered over a several year term would be $9 billion to the purchaser. That would put the value of the Beetaloo gas at $108 billion.
Dr Scrimgeour, head of the Northern Territory Geological Survey for more than 15 years and recently awarded a Public Service Medal, is the highly respected organiser of the AGES conferences.
He gave an overview of the mining industry to the Alice Springs News.
Which new mines, gas or oil deposits have the money and are ready to start operations in the The Centre in the current year?
DR SCRIMGEOUR: At Warrego near Tennant Creek Northern Iron have commenced construction of a plant to process the tailings there to produce magnetite.
NEWS: Are there any mines for rare earths and other critical minerals needed for electricity generation or storage?
DR SCRIMGEOUR: Arafura at Aileron are close to making an investment decision for the Nolans project.
NEWS: How much does the department spend on exploration and makes the results available to the industry at no charge?
DR SCRIMGEOUR: The Resourcing the Territory Program is funded at $9.5m. Of that about $3m is for competitive grants for the exploration industry. The remainder is focussed on generating the new data to stimulate exploration and we give all that away for free.
NEWS: The total value of mineral production in the Northern Territory was $4.4 billion last year. In the 2023/24 Budget royalties amounted to $367m. Apart from this, how much of the mining money stays in the Territory?
DR SCRIMGEOUR (at right): I don’t have the figures on that. The $4.4 billion is just the value of production, the value of material sold [not the costs].
NEWS: What was the best news from this year’s AGES?
DR SCRIMGEOUR: The diversity of opportunities and new discoveries of graphite and rare earths have been the main highlights.
NEWS: In Central Australia?
DR SCRIMGEOUR: No, the recent graphite and rare earths discoveries are more in the northern half of the Territory. However, we are seeing very strong interest in rare earths exploration here in Central Australia
PHOTO at top: Government online promotion of its code of practice for petroleum and gas exploration, appraisal and production activities.
UPDATE 18/4/24
$367m in royalties on $4.4b value of material sold would be 8.3% ad valorem (on the total value of the ore, oil or gas produced, not the profit or loss made).
UPDATE 18/4/24
Mr Monaghan and Chief Minister Eva Lawler issued this media release:
The Territory Labor Government is focused on growing our economy and natural gas is a key pillar in our comprehensive plan.
As announced on the ASX, Empire Energy has successfully raised over $46m enabling them to progress drilling in the Beetaloo Sub-Basin for natural gas.
The drilling will comprise of a pilot development well for pre-production testing. Empire Energy is anticipating commencement of commercial production by 2025 with the first supply of natural gas going into the Northern Territory Market.
This announcement highlights international confidence in the Beetaloo Sub-Basin and in the Territory’s economy moving forward, with an estimated $17 billion increase in economic activity through the Beetaloo Sub-Basin alone.
NT will be changed forever with accelerating climate change. The sooner new fossil fuel investments end the sooner the climate will stabilise.
Currently, the people of the NT receive little benefit from the large amount of gas processed at the Darwin terminal.
The gas is piped to Darwin and then leaves for export destinations. No royalties are paid on the gas and it is not available to domestic consumers or industry.
If the NT is to benefit from producing gas, royalties need to be paid. In addition, to ensure on-going supply, the Territory needs a gas reservation policy similar to WA.
The gas industry is not supportive of this as they wish to sell to the highest bidder. What is to prevent them from doing this at the expense of the Territory, without a gas reservation policy in place?
There’s nothing natural (gas) about fracking.
Can’t you guys read, first gas going to the NT.
There will be a lot of jobs created.
NT will get royalties and original land owners.
What is there not to like.
Better than burning tonnes of coal.
Glad you’re so trusting, Nick! No doubt you are across all the legal agreements and parties involved.
@ Nick: Yes some of us can read. Moreover some of us can read between the lines.
A December 2023 ASX announcement included: “… under which a newly formed corporation in the State of Delaware (Tamboran US HoldCo) will become the new parent company of Tamboran Group following the implementation of the Scheme.”
Call me cynical, might this be a step towards minimizing taxes paid in Australia? (Easy: the US co. provides the capital and the interest charged is deducted form Australian taxable income – this is what the other Australian gas exporters are doing.)
In 2009 Tamboran applied for permits covering the Ngalia Basin. When they came to Yuendumu to meet (through the Central Land Council) with the Traditional Owners of part of the area they intended to explore (for fracking shale gas) I checked their web site.
Inter alia they touted their 100% ownership of “whole of basin” permits in the Ngalia Basin. Not a mention that much of the basin is on Aboriginal Land which required them to obtain Traditional Owner consent. They carried on as if Terra Nullius had not been legally debunked.
And I haven’t even mentioned when in 2017 Tamboran was told to frack off from Ireland.
Don Fuller is glad you’re so trusting Nick.
That the NT Government appears to be equally trusting on the other hand is nothing to be glad about.
I’ve just read the news. The NT Government has purchased gas from Tamboran before they produced it.
Years ago the locally owned Yuendumu Mining Company (which I tried to manage) tried to sell sealing aggregate to the NT Government before we produced it. Talk about a lead balloon!
I guess we should have shifted our headquarters overseas and we might have got a look-in.
Yes Frank. A “deal” has been signed by the NT government. What are the details of this deal? Does it mean NT residents are effectively paying for access to gas resources they already own? A gas reservation policy avoids this “double wammy” by gas companies. What about royalties? Are these part of a deal signed by a naive Territory government?
Details of the deal of course, will not be available to the resident Territory owners. Such details will be protected by the exceptionally vague and politically convenient catch all of “commercial in confidence”!
Nick: Reading a bit further between the lines.
As Frank notes Tamboran US HoldCo is a newly formed corporation in the US State of Delaware. Which is a tiny State with no connection to the gas industry.
An article by the International Consortium of Investigative Journalists reports that
a little-known side of Delaware’s lax corporate tax laws has allowed the more than one million companies registered in Delaware to cloak themselves in secrecy and, in some cases, engage in illicit or dodgy financial activity.
It’s called the Delaware Loophole, and it’s helping corporations avoid paying corporate income tax. They don’t even know who the owners of corporations registered in Delaware are, or where they are located, and there’s no way of knowing because they just don’t even ask for the information.
Would you buy a used gas well from this mob?
Tamboran Resources sign binding GSA with Northern Territory Government.
There is desperation in the gas deal for Beetaloo gas, the primary purpose of which is to head off an electorally disastrous sharp rise in power prices as Black Tip gas supply falters.
Gas will be delivered on a take-or-pay basis at a market-competitive gas price, escalating at 100% of the Consumer Price Index (CPI).
We pay a market competitive price for our gas, $10/gj?
40 TJ/day = 40,000 GJ/day x $10/gj x 365 days = a cost of $146m per year – discounted royalty (because sale to NT Government) 6% + cost of environmental monitoring $3m PA = approx $140m /year for our gas.
Major Beetaloo developer Tamboran Resources shareholders love the deal.
Tamboran moved to the USA last year, they say to facilitate fund raising?
It isn’t possible to compare this new contract with the gas contract with Eni for Black Tip gas because the NT Government has always refused to reveal the price.
The deal is very profitable for the companies and provides long term stability for NT gas supply at a time when Eni is in dispute with Power and Water over Black Tip gas supply.
We are protected from price hikes and supply shocks and that encourages industry in the NT. The gas is not cheap but cheaper than the alternatives available. Environmental monitoring is paid for by the NT Government as opposed to the company.
The NT will collect discounted royalties.
But there is severe environmental damage and we pay for monitoring, there is no gas reserve, and no free gas nor a Government stake in the project.
The price of gas to consumers is likely to stay the same with adjustments for CPI.
Beetaloo has headed off a threat to the NT Government’s re-election but will not be transformational for the NT.
I did wonder why Delaware? Thank you for clarifying that Charlie.
Until now the only time I’d heard of Delaware was in the Perry Como song: What did Dela wear?
Now we know. A cloak of secrecy!
In all of this Charlie is spot on. What bothers me is that gas will eventually be an obsolete source of energy.
Many years ago a company, Geodynamics came close to proving up geothermal in the Cooper Basin but was hijacked by other interests, some political and some commercial, but was thwarted by drilling to the required depth.
They supplied Inaminka at one stage, and Birdsville also had a plant running. I was an initial shareholder in Geodynamics believing in the ethics of the process, which petered out through cost blowouts associated with drilling to depth.
There was interest in the NT and legislation was passed to assist that development. We have huge resources of geothermal energy but never explored, or even considered.
Now the drilling technology has moved on overseas, using short wavelength radiation-microwaves vaporising the rock instead of rotary drilling.
Depths of up to 10 Km can be achieved, which makes geothermal highly attractive commercially.
This is where the government should be looking and inviting expertise from overseas to come here to do their research.
Just another example of short term expediency at our long term expense.
The same criticism should be directed at conservation of water. Singapore for example was at one stage recycling 65% of its domestic waste water. Why not here?
Frank, she wore a brand new Jersey.
Indeed Charlie. She bought that brand New Jersey at the duty free.
So where has Oregon? Unlike Tamboran she went to pay her Texas.
The geothermal resource at Moomba was estimated to supply Australian needs with electricity for 26,000 years. With our resource here we should be exporting clean electricity not gas, to the rest of Australia via an electrified rail system supplemented by solar just as they are doing in many other parts of the world.
It is interesting to note that in the west of the US Google is building the largest battery storage in the world to electrify much of the US via geothermal using microwave technology to drill wells.
Gas will be obsolete within a short time, but we will still be looking backwards as has become the norm.
This is all available on line but largely ignored.
Thanks for the educated discussion, gentlemen.
@ Trevor Shiell: Yes the geothermal resource at Moomba was estimated to supply Australian needs with electricity for 26,000 years but at what cost, both in the capital needed to bring it into production and the cost to the consumer?
Geodynamics pushes serious technological boundaries which is why some $184m allocated in grants to geothermal by government has not yet seen large scale production. The depths needed to drill and the fracking are seriously deep by the standards of the oil industry.
Moomba geothermal drilling needs to go to almost 5km in granite (which is much harder than the sedimentary rocks the oil and gas industry needs to drill) to reach useful temperatures of 250C.
This very deep drilling is considered highly risky by the oil industry, with a low success rate for each multi-million dollar diamond drill hole.
Moomba geothermal resources are simply not competitive with gas.
In 2030 the selling price for geo is predicted to be 30% higher than Beetaloo fuelled power that will supply the NT and the East Coast.
Solar power is also an immature technology. The outcome of the $12.5m government grant to Desert Knowledge Australia (an amount that could have paid for 3000 domestic roof mounted solar plants) was that DKA see a range of options but no clear way forward.
In the West USA they have the capacity to go down around 10 km now, granite or no granite, because they no longer use 20 year old technology.
The high energy microwave technology will eventually find its way here and leave rotary drilling for dead.
We just don’t look at what is happening in other places and prepare to advance with the technology -something we are not good at doing. Nor are we prepared to risk capital because we would prefer a renovated bathroom.