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Zombie projects brought back to life by Morrison's plans for Queensland gas

Business

Gas projects that have been sitting zombie-like in the middle of Queensland with only a remote possibility of ever getting started have been revived through the Federal Government’s gas strategy.

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Galilee Energy had a roaring day on the markets on Wednesday, rising 12 per cent and more than 1.2 million of its shares trading hands.

Blue Energy, a small Brisbane-based company, has had a similar success. It has been niggling for more than a year for a pipeline from its northern Bowen Basin gas field to the east coast. Without it, the company’s holding of more than 3000 petajoules of uncontracted gas, which is worth a fortune and capable of supplying the market for 20-plus years – is stranded and waiting for someone like Arrow Energy to finally develop their own project and pipeline in the basin.

Arrow has not given up hope of doing something in the Bowen, but it has been stung in the Bowen Basin before. In 2016 it suffered a $1.4 billion writedown after drilling in the Bowen Basin failed to deliver expected results and has delayed the project. Right now it’s doing appraisals in the region so nothing is off the table.

Arrow has done work on a pipeline to Gladstone from north of Moranbah which it said would inject about $2.9 billion into the economy and support almost 3000 jobs.

The Queensland Government has to also be looking at the issue with some concern. Its 700-megawatt Callide B power station is scheduled for closure in 2028 and another generator, probably gas-fired, would need to be developed.

But there is also some scepticism among the juniors that the big gas producers don’t want the shake-up that appears to be looming.

The Federal Government scheme would be to unlock five key gas basins starting with the Beetaloo Basin in the NT and the North Bowen and Galilee Basin in Queensland, at a cost of $28.3 million for the plans.

It would also identify priority pipelines and critical infrastructure as part of an inaugural National Gas Infrastructure Plan worth $10.9 million that would also highlight where the government would step in if the private sector did not invest. It would also establish an Australian Gas Hub at Wallumbilla in Queensland to deliver an open, transparent and liquid gas trading system.

The Queensland Government has also committed to a $5 million study for a pipeline route from the North Bowen Basin to the east coast.

Blue managing director John Phillips said the supply would act to lower the price of gas and enable manufacturers to enter long term contracts.

“This in turn would encourage expansion and growth of existing manufacturers and the entry of new manufacturers to establish themselves in Queensland,” he said.

“Along with extending a lifeline to struggling Australian east coast manufacturers and assisting in rebuilding the economy, the long term gas supply from the Bowen Basin will be critical to firm up large renewable energy projects to meet Queensland’s mandated 50 per cent renewables target by 2030.”

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