Gas pipeline. Credit: Steev Hise.

Energy infrastructure company Jemena has signed a new contract to deliver eight terajoules (TJ) of gas a day across the $800m Northern Gas Pipeline (NGP) in Australia to Santos.

The 622km pipeline is set to connect Tennant Creek in the Northern Territory and Mount Isa in Queensland.

The gas shipped through NGP will be used to provide energy for local mining and mineral processing operations in the Mount Isa region.

With the signing of the new agreement, nearly 80% of the total available capacity of the pipeline in its first year of operations has now been contracted.

“This agreement provides more much-needed gas to the mining and processing sector in the Mount Isa area, and is a positive for the local community.”

Jemena corporate development executive general manager Antoon Boey said: “Today’s announcement proves strategic investment decisions like the Northern Gas Pipeline can help to mitigate forecast gas shortages while bolstering local industry and strengthening the Northern Territory’s growing gas credentials.

“This agreement provides more much-needed gas to the mining and processing sector in the Mount Isa area, and is a positive for the local community, who will benefit not only from jobs which rely on gas as a direct feedstock but from the flow-on effects of having a vibrant local economy and industry.”

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The gas transportation contract with Santos is valid for a period of three years from the first day of commercial pipeline operations.

Santos managing director and CEO Kevin Gallagher said: “This is a great commercial outcome for all the parties involved and it is also good for the east coast domestic gas market, connecting the Northern Territory into this supply grid.

“It’s absolutely critical that we continue to open up new gas supply sources to service the domestic market as existing, mature fields decline.”

Earlier this year, Jemena entered a contract to deliver 32TJ of gas a day to Incitec Pivot’s (IPL) Gibson Island facility in Queensland.

Construction of the pipeline is currently in progress and Jemena expects to flow first gas later this year.