Building on our foundation gas industry: the Territory’s oil and gas story

An abridged version of a speech by the Chairman of the Northern Territory Gas Taskforce Mr Paul Tyrrell AO.

The start of operations from INPEX’s Ichthys LNG on Bladin Point was an exciting event in the Territory story and established Darwin as a globally significant liquefied natural gas export hub.

What began as a single train at Wickham Point, the Darwin LNG project is now a three-train onshore LNG export hub.

Darwin is now a service and supply centre supporting these onshore trains, as well as an additional fourth offshore train, the Prelude Floating LNG facility.

The Territory gas story starts more than 30 years ago, with the development of gas fields in central Australia and the development of the Amadeus Gas Pipeline.

There are more benefits to come from both offshore and onshore gas.

There is more than 30 trillion cubic feet of proven gas reserves in the Timor Sea yet to be developed.

After regulatory reforms to support onshore exploration and production, the Territory can capitalise on onshore gas.

Existing wells drilled by Origin, Santos and Pangaea, and associated discovery reports indicate that there is a P-50 Gas-In-Place Resource for the Velkerri B Shale alone of at least 500 trillion cubic feet across the Beetaloo Sub-basin.

To put this in context, 10% of this onshore resource is four times the size of the Ichthys gas field that is the gas source for the Ichthys LNG project.

These are significant opportunities close to Darwin. They promise cheap gas at volumes capable of supporting an expanded and more diverse gas industry, future expansions of our LNG export hub and a contribution to national energy security for the east coast gas market.

The Northern Territory Government’s vision is:

By 2030, the Northern Territory is a world class hub for gas production, manufacturing and services

LNG export hub expansion

The Territory has planned for and can expand its LNG export hub. The Territory’s approach to LNG has been long term from the start.

Both Darwin LNG and Ichthys LNG projects have land, or options on land, adjacent to their existing facilities sufficient for up to a further five LNG trains in total.

This would more than double existing Territory LNG production, by adding more than 20 million tonnes per annum. There is also ample infrastructure already in place.

Both Darwin and Ichthys LNG plants are in a position to secure gas from either existing proven offshore reserves or from future onshore gas developments, following the successful implementation of the onshore regulatory reforms to enable exploration and production.

Darwin will be a growing part of the region’s LNG supply solution.

Grow the service and supply industry

Darwin’s service and supply capabilities began as support for our LNG export hub.

The industry supports both onshore and offshore facilities across the whole project lifecycle: exploration, construction and production. This also includes through life maintenance and shutdowns, and decommissioning.

In 2011, Darwin was providing around $150 million worth of services a year. An ACIL Allen report found this could rise to $420 million over the next 20 years.

The challenge is to understand:

  • the total amount of work that is contestable and needed to support the current gas industry
  • how much of that work is performed by our current supply sector, and finally
  • how much of that work could be performed by local Territory businesses through developing new capabilities and joint venturing with specialist companies.

The Territory is partnering with the Industry Capability Network Northern Territory (ICNNT) to do this work. ICNNT will identify existing opportunities around Darwin’s LNG export hub, including backfill of Darwin LNG, as well as future opportunities in supporting the onshore gas industry.

Efforts to identify market opportunities are matched by the Northern Territory Government’s investments in land and infrastructure.

The East Arm Logistics Precinct, the Darwin Business Park, the Darwin Marine Supply Base and the soon to be constructed Darwin Ship Lift and Marine Industry Park all support the Territory’s supply sector.

Establishing a sustainable gas-based and energy-intensive manufacturing industry

The Territory can diversify into sustainable gas based manufacturing. Darwin can be a new manufacturing hub in the north and for Australia.

In Australia’s south east, high cost, low certainty gas contracts threaten the viability of manufacturing. In contrast, the Territory’s gas reserves are an obvious attraction for firms that use gas as the feedstock for industrial processes.

The development of new gas sources from onshore locations in the Territory will help key industries within the Australian manufacturing sector.

Darwin and its location close to significant offshore and onshore gas resources and Asian export markets is in the right place at the right time.

Opportunities exist for condensate refining, production of ethane based petrochemicals, and the manufacturing of methane based products including methanol, ammonia and ammonium nitrate, urea, other fertilisers that use local phosphate deposits, and energy intensive industries.

Technological change will bring further opportunities, including local value-adding. Methanol is an export product at present. In time, smaller scale methanol to olefins technology could represent a new and more attractive path to key products, including plastics.

However, it is also evident that the Territory will need to be globally competitive. It is not the only jurisdiction with long term, competitively priced gas resources. Incitec Pivot has just completed a major world scale development in Louisiana USA on the back of shale gas development.

The Territory’s plans need to include world scale plants based on the latest technology, and - of course - with long term, competitively priced gas supply.

Success here would cascade benefits throughout the Territory’s economy. These benefits - from successfully establishing some or all of these industries potentially ranging in size from small to multi-billion dollar plants - would range from significant to huge.

For example, preliminary analysis by Port Jackson Partners of the total incremental direct economic activity of an ethane based petrochemicals plant, an ammonia to urea plant and a methanol plant - all of world scale - relative to LNG only, would be of the order of $10 billion for Australia and $3 billion for the Territory alone. This assessment does not include the significant multiplier effects which would be considerable. A further detailed study to assess potential economic benefits of various scenarios for gas based manufacturing has commenced.

These numbers imply a significant broadening and deepening of the Territory’s economy.

Such an outcome would be a substantial payoff for the long running commitment by governments at all levels to develop the north.

The North Australia Infrastructure Fund, established under the banner of developing the north, a $5 billion dollar fund, could assist proponents to achieve a positive outcome for greenfield gas based manufacturing projects.

The goal of broadening the economic benefits to the Territory through the development of gas based manufacturing is within our reach.

Aerial view of Darwin LNG onshore facilities, Wickham Point
Darwin LNG onshore facilities, Wickham Point
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Research, innovation and training

The Territory will develop its research, innovation and training capacity.

The Territory has an opportunity to boost its training and research infrastructure in support of the oil and gas industry.

Large scale, long life gas developments require many trained people. Well-connected, local training facilities are a more compelling proposition than those in southern capitals or internationally.

Local training of oil and gas industry specialists would also allow advanced technologies and innovations to spin off into other industries important to Darwin, such as defence.

Further investment is an essential part of ensuring the Territory remains competitive as a global gas hub.

The Territory needs to continue to invest in strategic initiatives such as the North Australia Centre for Oil and Gas (NACOG) - a partnership between Charles Darwin University, government and industry.

NACOG, chaired by the Hon Paul Henderson, former Chief Minister of the Northern Territory, will continue to have an important role in ensuring that Territorians have the ability to get the skills and training needed to work in most areas of the offshore and onshore oil and gas industry. It will also provide industry with research capability for their operations and over time, this will include support for gas based manufacturing.

Another example is the Advanced Manufacturing Alliance, a new industrial transformation research hub for advanced manufacturing at the Charles Darwin University. The alliance is developing applications for SPEE3D’s high speed metal printing processes that would contribute to Australia’s capacity in advanced manufacturing.

East coast markets

To realise the Territory vision, the Territory will contribute to energy security in light of challenges on the eastern seaboard in terms of gas availability and price increases in energy.

The eastern gas markets are undergoing unprecedented demand and price increases. With the commencement of operations of the Northern Gas Pipeline later this year, the Northern Territory will be an exporter of gas to eastern Australia and a contributor to Australia’s energy security.

The size of the potential onshore gas resources are such that they can be supplied into eastern gas markets. Many stakeholders are already investigating new and expanded pipeline connections to both the east, and importantly, north.

The potential scale of onshore gas development in the Territory indicates that there is sufficient gas to support a meaningful contribution to the eastern gas market demands while supporting the Northern Territory Government’s vision for both an expansion of our LNG export hub and the development of gas processing and manufacturing.

Any measures taken by the Australian Government to secure critical supplies to the eastern gas markets must take into consideration existing and planned LNG expansion in the Territory and the opportunity to create a new manufacturing hub for Australia in the north.


Growing the Northern Territory economy through developing and diversifying the gas industry will require whole of government coordination and collaboration with industry.

To achieve this coordination, the Northern Territory Government has established a Gas Taskforce, with relevant departmental chief executives supported by industry expertise, and established a dedicated gas industry development unit in the Department of Trade, Business and Innovation.

A Gas Industry Reference Group has been established to provide a forum to exchange views and seek input on industry development issues.

The Territory has commenced a range of actions to realise the vision that ‘By 2030, we will be a world class hub for gas production, manufacturing and services’.

It is important that opportunities to diversify and add incremental value to the host economy are fully considered in development plans.

New major LNG and gas based manufacturing projects take years to develop and it is important that the Territory shapes the thinking of project developments now, and works collaboratively with industry, so that aims for both offshore and onshore developments are realised.

The Territory does not underestimate the challenges ahead to achieve significant development and diversification of our foundation gas industry, however, challenges are not new to us in the Territory.

In conclusion, we wish to work closely and in collaboration with industry to ensure that growth in LNG, gas industry diversification and associated cluster industries, including many high tech jobs, are delivered, bringing broader and deeper benefits to the Territory and in turn the nation.