NT chief minister pushes downstream gas projects

AUSTRALIA must treat emerging opportunities for downstream gas-based manufacturing as a national priority, Northern Territory Chief Minister Clare Martin told the APPEA national conference on the Gold Coast yesterday.
NT chief minister pushes downstream gas projects
NT chief minister pushes downstream gas projects
NT chief minister pushes downstream gas projects
NT chief minister pushes downstream gas projects
NT chief minister pushes downstream gas projects

With reserves of more than 150 trillion cubic feet of natural gas, the country has the opportunity to diversify its economic base and climb the value chain by developing new projects based on ammonia, methanol, olefins and their derivatives, as well as gas-to-liquids (GTL) fuel projects, Martin said.

“These types of projects would act as a catalyst for further industrial, supply and services investments, and these investments will help to build economic strength in regional Australia.”

While liquefied natural gas was central to growth in the Australian energy sector, the needs of the LNG industry had to be balanced against the need for more diverse economic development, according to Martin.

“The question that needs to be asked is whether it is in Australia’s best interest to see every single molecule being exported as LNG, or whether our long-term economic development is better served by a broader strategy,” she said.

“Given our very limited success in securing downstream projects – especially in comparison to other regions of the world – it’s an issue we need to address now.”

Other countries that have successfully attracted downstream gas industries include Trinidad and Tobago and Qatar.

Trinidad and Tobago is a major LNG exporter but also a major producer of methanol, Martin said.

“Its government has a policy of optimising the use of hydrocarbon resources by creating a diversified energy sector with a view to attracting spin-off industries,” she said.

“Only last month, an agreement was signed for the development of a $2 billion ethylene complex. It will create 300 permanent jobs and between 3000 and 6000 jobs in downstream plastics industries.”

In Qatar, the government requires companies exploiting the country’s giant gas fields to also invest in GTL diesel fuels projects. As a result, Qatar has become the world leader in this sector.

Martin said additional investments in downstream gas-based manufacturing would still leave plenty of gas for LNG projects.

“Ultimately this diversity will be measured in comparatively small volumes of petajoules, as the vast majority of gas will be exported as LNG,” she said.

But the smaller quantities of gas used by downstream industries gave “more bang per petajoule” than LNG, according to Martin.

A methanol plant would employ as many people as an LNG development but only require two thirds of the capital investment and a third of the gas consumption, she said.

Industries such as methanol, ammonia and olefins could deliver up to four and a half times the capital investment and 10 times the employment per petajoule compared to LNG, she said. These estimates did not even take into account the benefits from flow-on industries.

Martin also advocated support for GTL fuels. She said GTL could one day meet Australia’s deficit in petroleum liquids production, which Wood Mackenzie has projected will reach about 400,000 barrels per day in the next few years.

“GTL synthetic fuel has the potential to meet this shortfall through the conversion of around 1.5 trillion cubic feet of natural gas each year – the equivalent to the gas consumption of around five large LNG plants,” she said.

Martin said she had written to Prime Minister John Howard, proposing the establishment of a high-level working group to examine opportunities and impediments for downstream gas investment. The group would identify a range of policy options that could be considered by government.

She said there might also be a need to bring together upstream and downstream industry leaders to provide government with informed opinions on reform options.

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