Tamboran Resources (ASX: TBN) and Daly Waters Energy have entered into binding agreements with the APA Group (ASX:APA)Australia’s largest gas pipeline operator, to develop the Sturt Plateau Pipeline (SPP). The pipeline will support the proposed Shenandoah South Natural Gas Pilot Project, in which Tamboran and Daly Waters Energy are joint venture partners.
The 37km pipeline will connect the proposed Sturt Plateau compression facility to the APA-owned Amadeus pipeline, the main delivery point for gas volumes under a gas sales agreement with the Territory Government. North.
Tamboran and Daly Waters have committed to contracting the entire foundation capacity of the SPP from the start of operations until at least 2041.
APA will build, own and operate the pipeline, with construction expected to begin in the second half of 2025, and operations to begin in the first half of 2026.
Tamboran Managing Director and CEO Joel Riddle said: “With natural gas being the largest source of electricity generation in the Northern Territory, Tamboran is proud to play a vital leading role in securing energy supply reliable in the Territories – keeping the lights on and the air fresh. air conditioners running.”
Energy regulator rejects proposal
In a separate announcement, APA reported on its Basslink high-voltage submarine cable, which connects Tasmania’s electricity network to Victoria.
Currently, cable is classified under a market network service provider (MNSP). This means that APA submits bids for transmission capacity to the Australian Energy Market Operator (AEMO) at different intervals. AEMO collects offers from all suppliers, ranks them from lowest to highest and prioritizes the cheapest offers to meet demand. The highest accepted bid determines the spot market price for an interval, and this is paid to all successful bidders.
The APA sought to have this classification changed and instead operate the Basslink interconnection as part of a transmission network service provider (TNSP). TNSPs are essentially monopolies under the supervision of the Australian Energy Regulator (AER). The AER predetermines its revenue based on construction, maintenance and operating costs, plus a reasonable return on investment, and this amount is paid regardless of daily fluctuations in demand. Indeed, TNSPs are guaranteed a stable and predictable income stream.
However, the AER has issued a draft decision not to change the regulatory classification of Basslink.
Adam Watson, CEO of APA, commented: “If today’s draft decision… is confirmed as final, APA will seek to maximize the value of the asset, in the best interests of APA’s investors , advancing our plans to exchange Basslink capacity in the spot market. , in accordance with market rules, once Hydro Tasmania’s contract expires on June 30, 2025. We will be able to leverage existing systems and capabilities in place within APA.
Further consultations with stakeholders, including the APA, are expected before the AER makes its final decision.
Shares of APA Group closed down 1.51% yesterday at $7.18.
Shares of Tamboran Resources closed up 3.85% at $0.14.
