Empire Energy pens 10-year gas supply deal with Northern Territory

Sydney-listed Empire Energy has signed a 10-year binding gas sales agreement (GSA) with the Northern Territory government to supply 25 TJ/day from the Carpentaria pilot project starting next year, the company announced on July 26.

The agreement includes a provision for an additional 10 TJ/day supply for up to 10 years at the buyer's option, contingent on production levels from the Carpentaria project exceeding 100 TJ/day (option supply). The volume under the option supply is capped at 10% of production from the Carpentaria project if production reaches 100 TJ/day. This would necessitate the development of additional pipeline capacity to facilitate increased supply to Australia's east coast and/or Darwin.

The gas will be delivered to the state government-owned utility Power and Water Corporation (PWC)-operated McArthur River Gas Pipeline (MRP) on an ex-field take-or-pay basis at market-competitive gas prices, escalating at 100% of the consumer price index, according to Empire. The option supply would be priced slightly lower than the initial supply, offering the potential for long-term affordable energy for the people of the Northern Territory if larger-scale development occurs.

The binding GSA is conditional on customary conditions, including Empire reaching a final investment decision for the Carpentaria pilot project. Empire holds a 100% interest in EP187, where the Carpentaria pilot project is located. The company aims to commence gas sales from the pilot project in mid-2025.

Last year, Empire acquired AGL’s Rosalind Park Gas Plant (RPGP) for A$2.5mn ($1.64mn) in cash to support the Carpentaria gas project. The RPGP has a design capacity of 42 TJ/day and supported AGL’s Camden gas project until it ceased production in August 2023.