The Australian government plans to invest in the Northern Territory in the coming years to transform the region into a liquefied natural gas (LNG), hydrogen and manufacturing hub as global energy supplies tighten.

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The government intends to invest $2.6 billion in infrastructure projects across the territory, including a $1.5 billion investment in the Middle Arm Peninsula, which is home to the Darwin LNG and Ichthys LNG export terminals.

“Darwin is close to our main international markets including Japan, Taiwan and South Korea. Each week, Darwin exports about three LNG cargoes,” said the government’s Kevin Fong, director of the Gas Taskforce in the Department of the Chief Minister and Cabinet. 

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“We are leveraging off our LNG industry to build scale,” he added. “We are a relatively small domestic market,  but we are focused on an international scale, and our goal is a low-emissions goal, as well as supporting our economy.”

Development plans include new infrastructure to support future projects, including those for low-emissions LNG, hydrogen production, and carbon capture and storage (CCS). The government is increasing investments at a time when competition for energy supplies is expected to grow as consumers in Europe and Asia look to pivot away from Russian fossil fuel imports.

Driving Growth

Australia, Qatar and the United States have driven growth in global liquefaction capacity in recent years and all three nations are expected to play a larger role in helping buyers displace Russian gas exports in particular.

The  Northern Territory has the resources to aid in further development, Fong told NGI, “ but we don’t have the population or the market to support  these resources, and that’s why the government is targeting international markets.”

In October 2020, Japan and South Korea both committed to reaching net-zero emissions by 2050, and both are focussed on strategies to significantly expand hydrogen use to achieve these targets. 

Santos Ltd.’s Darwin LNG terminal has been operating since 2006. The Bayu-Undan field that supplies the terminal is expected to be depleted by later this year. Santos is developing the Barossa gas field to fill the void and Bayu-Undan is now slated to be used for CCS. Santos has a memorandum of understanding with Eni SpA to look at both CCS and the development of a second train at Darwin LNG, as well. 

Japan’s Inpex Corp. also recently released its long-term strategy, which includes increasing Ichthys LNG production capacity from 8.9 to 9.3 mmty and implementing CCS at the facility. 

Fong expects the decline in developed gas fields in the region to be met by the development of other resources. 

“Offshore we have over 30 Tcf of  proven reserves yet to be developed and onshore in the Beetaloo Sub-basin we have an estimated 500-plus Tcf of gas-in-place in one layer alone,” he said. “We have four companies actively appraising their acreage and proving up reserves and commerciality.  So, even realizing 10% of these reserves we can support several more trains than anticipated.”

Fong acknowledged the projects are facing resistance from environmental groups who have cautioned against their impacts on air, soil and water quality. But he noted that successive governments have been focused on growing and diversifying the gas industry, which plays a big part in the region’s economy.

The abundance of gas reserves and renewable energy resources can “advance our goal of  establishing low emissions petrochemicals, renewable hydrogen, CCS and minerals processing,” Fong said,“ but that will be underpinned by LNG. If it is gas based it will need to be decarbonized.”

A carbon capture hub combined with renewable power has the potential to capture 97% of the planned precinct carbon emissions from LNG and 95% of the emissions from ammonia, methanol and ethane cracker plants, he said.