Plans to build a 1,561 km gas pipeline from the Norther Territory’s Beetaloo Basin to south-east Queensland could cost as much as $9.74 billion, a new report has found, adding huge costs to a heavily polluting project.
The Beetaloo gas project is already controversial because of its role as a major “climate bomb” because it is adding emissions to a climate already under peril, but the proposal to build a massive pipeline to connect into Australia’s main industrial centres has been described as “preposterous.”
Market Forces has analyses newly published figures from APA Group and found that the Queensland section of the proposed North to East Australia Pipeline (NEAP) alone will cost up to $4.2 billion, 41 per cent more than first indicated, while the full pipeline cost would “blow out” to $7.4 billion.
Further analysis applying the pipeline capex assumptions of Rystad Energy finds that the cost of the now-proposed 1,561 km pipeline could rise to $9.74 billion.
Either way, says Market Forces, “both approaches indicate NEAP is likely to cost substantially more than APA’s existing figures imply,” and that “further strains an already challenging business case: the more the pipeline costs, the greater the cost of the gas that flows through it to consumers.”
Market Forces says the cost discrepancy comes from APA Group’s “deeply concerning” failure to update costs that were originally estimated based on a 34-inch pipeline, after the proposed pipeline’s diameter was increased to as much as 48 inches.
The analysis finds that applying that increase in diameter lifts the indicative Stage 2 cost to $3.88–$4.24 billion, which is $1.13–$1.24 billion above APA’s published estimate.
Applying the same cost-per-kilometre and diameter to the full proposed NEAP – 1,561 km from the Beetaloo Sub-basin to the South West Queensland Pipeline – produces an indicative whole-pipeline cost of around $6.74–$7.35 billion, the analysis says.
And then applying Rystad Energy’s published unit-cost methodology to the full 48-inch NEAP produces an indicative cost of $7.49–$9.74 billion.
Market Forces says that before even considering this cost blowout, independent forecasting has estimated Beetaloo to be up to 2.5 times more expensive than existing Queensland gas sources for the East Coast.
“A pipeline costing up to $7.4 billion would further undermine an already weak economic case for Beetaloo gas,” the report says. “The gas is expensive to produce, expensive to transport and would need sustained high prices to recover the cost of the infrastructure required to get it to market.”
And in notes that senior Chevron and ExxonMobil executives have both questioned whether gas from Beetaloo could ever be financially viable, pointing directly to the amount of new pipeline infrastructure required to compete.
“APA is sweeping key information under the rug about the ballooning costs of this fracked gas pipeline,” says Market Forces policy analyst Morgan Pickett. “It can no longer disguise that it simply doesn’t stack up.
“This preposterous pipeline risks locking Australians into higher power bills for decades. The Beetaloo gas development is only viable at high prices, so households and businesses will be the ones paying heavily for it.
“APA is already more than $14 billion in debt and it needs to come clean on whether its Beetaloo pipeline is a legitimate proposition, or a multi-billion-dollar pipedream built on shaky fundamentals,” Pickett adds.
“The economics are flawed, but the climate cost of this pipeline is even worse: it would unlock decades of fracking from one of the world’s biggest gas developments mainly for export, when the science says new fossil fuel production must be slashed.”
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