Santos, council enter into non-binding agreement for industrial gas supply

Santos and Narrabri Shire Council have signed a non-binding memorandum of understanding for the potential supply of gas to a new industrial precinct.

The gas would be sourced from the company’s Narrabri gas project in a deal which both parties hope will attract new business and boost economic growth in the region.

The memorandum outlines Santos’ commitment to supply natural gas to businesses operating within the Northern NSW Inland Port, on the western outskirts of Narrabri, from project commencement, the company said in an announcement on Friday afternoon, coinciding with the weekend’s Santos Festival of Rugby held in the town.

Under the proposed agreement, Santos would supply council with up to 3.2 PJ per year of competitively-priced natural gas for up to 10 years, subject to capacity of the Wilga Park Power Station lateral pipeline and Santos’ final investment decision for the project.

Santos managing director and chief executive officer Kevin Gallagher officially signed the memorandum with Narrabri Shire mayor Darrell Tiemens and general manager Eloise Chaplain ahead of the weekend’s festivities.

The agreement follows similar offtake arrangements signed with diversified energy company ENGIE and mining and infrastructure solutions provider Orica. The agreement reflects the overwhelming demand for Narrabri gas, the company said in its announcement late last week.

Mr Gallagher said Santos voluntarily committed 100 per cent of Narrabri gas to the east coast domestic market in 2020.

“We know from our experience in developing Queensland coal seam gas that Narrabri gas will be a very competitive source of domestic gas supply for the east coast market that is further advantaged by proximity to customers in NSW,” Mr Gallagher said.

“We are excited to partner with the Narrabri Shire Council to help attract businesses to the new industrial precinct with reliable, competitively-priced gas and electricity. This will, in turn, create new opportunities for local jobs and small and family businesses in Narrabri.

“We are committed to Narrabri and we are committed to getting natural gas into the Northern NSW Inland Port industrial precinct.”

Mayor Darrell Tiemens said access to a reliable, competitively priced energy source is crucial for attracting new industries, expanding local employment opportunities and realising Narrabri’s full potential as a regional industrial hub.

“Narrabri Shire is proud to secure the cheapest gas in NSW, giving our existing businesses certainty and providing the spark to attract new industries,” Cr Tiemens said.

“With two major rail lines and national highways crossing through our Shire, we are uniquely placed for growth.

“Already the second largest economy in northern inland NSW, Narrabri is ready to build on that strength – creating jobs, welcoming investment, and cementing our place as a hub of opportunity.”

Santos bought the Narrabri Gas Project asset in 2011 and has been working for more than a decade to develop it, investing more than A$1.5 billion to date.

Gas from Narrabri appraisal wells already supplies the Wilga Park power station, producing enough electricity to power 32,000 homes in New South Wales.

The non-binding memorandum of understanding sets the foundation for further detailed planning, feasibility studies, and stakeholder consultations, the company said in its announcement last week. Both parties intend to work collaboratively to move towards a binding agreement and implementation phase, subject to the outcomes of these initial steps.