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Central Petroleum and Macquarie Group have been given the green light to develop the Mereenie gas project in Australia’s Northern Territory, including upgrades to the processing plant.

The 50:50 joint venture between wholly owned subsidiaries of Central Petroleum and the Macquarie Group has agreed and signed Authorities for Expenditure to confirm an immediate $12 million upgrade of the processing plant, and drilling of WM26.

The NGP is a 622km pipeline that will link Tennant Creek in the Northern Territory with Mount Isa in Queensland.

“Ideally the plant upgrade decision should have been made in February (2018) to ensure the work was completed by the time the NGP became operational,” Managing Director of Central Petroleum, Richard Cottee said.

“But Central was never, nor should it be, in control of regulatory approvals and while it will be tight central, as operator, will use every endeavour to ensure the Mereenie processing plant has the capacity to sell 58TJ/day of Sales Gas by the end of (2018).”

It is expected to be operational by December 2018 with an initial capacity of 90 terajoules per day, of which about 32TJ per day has been contracted.

The Mereenie plant upgrade is targeting an increased capacity from its current 25TJ per day to a new level of 63TJ per day.

At the new capacity, 58TJ per day can be sold as gas without adversely affecting current crude oil production, Central Petroleum stated.

The decision to develop Mereenie’s gas potential to coincide with the Northern Gas Pipeline (NGP) becoming operational was made in 2017, subject to ACCC approval of its joint marketing application.

After the ACCC interim approval on 2 March 2018 to joint marketing on more restrictive terms than had been applied for, the Mereenie joint venture took into account the following matters:

  •  The east coast gas market remains critically short with prices remaining at the $8-$10/GJ citygate
  •  The increased flexibilities in the system as a result of pipeline reforms, particularly the day ahead auction proposal
  •  The pipeline reforms promising more internationally competitive pipeline tariffs
  •  The work that Central has done on the FEED for the Mereenie plant upgrade

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