Australian Pipeline Trust (APA) announced this morning that it had signed a heads of agreement with the Northern Territory Government and Power and Water Corporation to develop the pipeline.

Negotiations started in December after PWC and Blacktip operator Eni Australia signed a gas supply deal to meet the NT’s long-term power requirements from 2009.

At the time, the utility said the Blacktip field’s 1.2 trillion cubic feet of natural gas should be able to meet PWC’s additional gas supply needs for at least 22 years.

Capable of delivering about 30 petajoules per year, the 275km pipeline would run from the onshore gas plant at Wadeye, through the Amadeus Basin to connect to the Darwin Pipeline (ABDP) in Adelaide River. APA has a 96% interest in NT Gas, the operator of the ABDP.

APA chief executive Mick McCormack said the pipeline’s final route and capacity requirements would be determined by the end of the financial year on June 30.

“This agreement for a major new pipeline development is an important step in realising APA’s long-term vision of bringing northern gas into Australia,” he said.

“It also builds on our long history in the Northern Territory and continues our commitment to support the growing energy requirements of the Territory through our existing ownership interest in NT Gas, the operator of the ABDP.”

The Blacktip field lies in WA waters on the WA-Northern Territory border. Developing the field could cost as much as $750 million.

At the time of the gas supply deal in December, PWC said the deal would secure the NT’s power needs before Amadeus Basin natural gas reserves, in Central Australia, runs out at the end of the decade. The utility’s contracts with Santos and Magellan for Amadeus gas run out in 2009.