NT’s deal with gas company to cost consumers $2.7 billion and enable fracking

The Northern Territory government has done a deal with gas pipeline company, Jemena, that could cost consumers $2.7 billion and enable fracking in the Northern Territory.

The cosy arrangement will rip off consumers and open up an enormous carbon bomb, exacerbating dangerous climate change.

Jemena wants to build another massive pipeline to funnel NT fracked gas from Tennant Creek 623 kilometres to Mt Isa in Queensland.

Fracking, or hydraulic fracturing, a method of extracting onshore gas, can contaminate groundwater, produce large amounts of fugitive emissions and adversely impact the climate.

Until recently, the practice was banned in the Northern Territory as a result of strong community opposition. An independent scientific inquiry deemed fracking in the NT an unacceptable climate risk based on life-cycle greenhouse gas emissions.

Only after the inquiry abandoned a key term of reference on risk mitigation, and after lobbying by Jemena, the NT government chose to lift the popular moratorium.

But even before the moratorium was lifted, the NT government quietly proposed an exemption to the Northern Gas Pipeline from the rules that regulate the gas industry.

The National Gas Rules were updated in 2017 to stop big companies like Jemena overcharging consumers for monopoly pipeline services. However, after its deal with the NT, Jemena can charge whatever it likes.

It is the only company with an exemption built into the rules. Without it, Jemena says finances for the new pipeline may not stack up. In financial filings to the Singapore Stock Exchange, Jemena says the pipeline will “promote gas exploration and extraction activity” in the NT and confirms it is not subject to economic regulation.

The Institute for Energy Economics & Financial Analysis (IEEFA) predicted in 2016 that the pipeline could not be built without significant subsidies.

Like Adani, Jemena has a track record of questionable behaviour. The company is already under investigation by the tax office for a corporate restructure that directed $800 million to build the initial pipeline. That arrangement involved inflated inter-company interest rates that sends capital offshore to Jemena’s owners, the governments of China and Singapore. Meanwhile, Australian taxpayers are set to miss out on $500 million.

In partnership with economists at the IEEFA, we are calling on the Australian Energy Markets Commission (AEMC) to remove the exemption. You can read our submission here.

The AEMC is powerful. It can over-rule the NT government and re-make the gas rules in favour of consumers, and ultimately, the environment. It is actively considering our request.

We’ll keep you updated!

— David Barnden, Principal Lawyer, EJA

 

Header photo © Jen Castro, Flickr CC