Australia Northern Territory contributes to LNG study

The study will look at the economic viability of ConocoPhilips building a second 'train' or liquefied natural gas (LNG) cooling facility in Darwin, the NT government said.

Chief minister Michael Gunner said the second train would involve a multi-billion dollar investment and help to develop Australia’s off-shore gas industry.

"The Territory Labor Government is focused on restoring trust by creating jobs, especially in the private sector, and we believe funding this feasibility study is a good investment," Gunner said.

The first train created around 2,500 jobs during construction and directly supports over 250 local jobs and $100 million in supplies and services, he said.

Kayleen Ewin, ConocoPhillips Australia West vice president for external affairs said the study is a "pioneering example of all of industry and government collaborating on solutions to unlock major investments".

The NT government will contribute around 40% of the study costs, with the remainder funded by ConocoPhillips and upstream resource owners, the government said.

The study is expected to be complete by the end of this year.

Australia has been increasing its LNG production capacity and is expected to have the world’s largest LNG production capacity, at around 85 million tonnes per annum or over 20% of global capacity once development is completed, a National Australia Bank (NAB) report said in January.

Growth has, however, been slower than planned, and global LNG prices have fallen since 2014. The volume of exports is also expected to rise, overtaking coal as Australia's largest export after iron ore in 2018. This exposure to LNG export markets is likely to increase wholesale prices significantly, with "far reaching implications for domestic gas use", NAB said.

The International Energy Agency (IEA) said in November 2016 that major transformations in the global energy system will mean that renewables and natural gas are the "big winners" in meeting energy demand by 2040.

Investment in oil and gas will remain essential to meet demand and replace declining production, but growth in renewables and energy efficiency will reduce demand for oil and gas imports in many countries. Increased LNG shipments will also change how gas security is perceived, the IEA said.

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