The Commonwealth and Northern Territory governments have signed a major deal to further speed up fracking and increase energy supply from a giant underground gas field in the remote NT.
Two days before going into caretaker mode ahead of the election, the federal government signed off on the joint $872 million deal to accelerate gas production in the Beetaloo Basin, about 500 kilometres south-east of Darwin.
As part of the agreement, the federal government said it would contribute $660 million and the NT government has allocated $212 million, with plans to boost gas supply from the NT to Australia's east coast by 2024.
The deal pulls together more than $550 million in already announced projects to boost the Northern Territory's renewable energy supply and security, as well as investing in technologies such as carbon capture and storage.
It also includes $300 million to support the production of liquefied natural gas (LNG) and hydrogen, as part of a $1.5 billion plan for Darwin's Middle Arm precinct revealed in the latest federal budget.
It marks the latest push by the federal government to accelerate fracking — a controversial drilling technique — in the Beetaloo Basin, under its plans for a gas-led recovery out of the coronavirus pandemic.
It follows previous funding intended to speed up development in the area, including money for road upgrades and subsidies for gas companies' exploration activities, and builds on recently promised federal support for new port facilities in Darwin Harbour.
Exploration is currently underway to frack the Beetaloo Basin, and the government has said the new supply target will reflect the proven findings of that exploration.
In a statement, Prime Minister Scott Morrison said the agreement was "about seizing the opportunities in the Territory to deliver a stronger economy and a stronger future, by investing in a new hydrogen industry and the Beetaloo to grow jobs and the local economy".
"This is also about ensuring households, businesses, and industries in the territory get a fair deal on energy, and more affordable, reliable power," he said.
Speaking on ABC Radio Darwin this morning, NT Environment Minister Eva Lawler said the NT government had been negotiating the deal with the Commonwealth for nearly two years.
Ms Lawler said the NT government has been "very clear about" supporting the onshore oil and gas industry, provided all 135 recommendations outlined in the Pepper Inquiry were implemented.
Among those commitments is Recommendation 9.8, which states that:
"both the NT and Australian governments must seek to ensure there is no net increase in the lifecycle greenhouse gas emissions emitted in Australia from any onshore shale gas produced in the NT".
This commitment is of particular concern to scientists and environmental groups, who fear fracking will fast-track the warming effects of climate change.
Ms Lawler said "we have to make sure that those 135 recommendations are comprehensively implemented, so that's the work that's absolutely being pushed ahead".
"Recommendation 9.8 was part of that agreement as well, making sure that the proponents and the federal government adhere to our net zero 2050 target," she said.
Funding deal sparks environmental concerns
Environment Centre NT co-director Dr Kirsty Howey said the deal failed to address Recommendation 9.8 of the Pepper Inquiry, describing it as "profoundly disappointing".
"We thought it would contain the answer to a fundamental question — and a promise made to Territorians — which was: 'How are the huge emissions that will be generated from fracking the Beetaloo Basin going to be offset?'," she said.
"Instead of seeing an answer on that, what we see is more money shovelled straight to the fossil fuel industry. It's really just a form of corporate welfare."
Some analysts believe the demand for LNG will grow, particularly in South-East Asia, and it would be needed as a backup for renewable energy sources.
However Bruce Robertson, an energy finance analyst at the Institute for Energy, Economics and Financial Analysis (IEEFA), has questioned its long-term economic viability.
"We do need the existing gas power plants we have in the national electricity market, there's just no doubt about that," he said.
"We need those plants to stay open. Do we need more gas to furnish more renewables? We've seen renewables go from virtually nothing to 35 per cent of the national electricity market, and we've seen gas over that time period decline.
Mr Robertson said Japan — one of Australia's biggest natural gas customers, along with China — had a program to cut the use of LNG in its power system by 50 per cent by 2030.
"We're looking at a massive decline in demand out of Japan," he said.
The invasion of Ukraine has also disrupted LNG projects in Russia, affecting investment and supply.
