Rule Change: Open

Overview

The rule change request from the Northern Territory Government proposes to exempt certain LNG facilities from providing information to the Natural Gas Bulletin Board. 
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The rule change request from the Northern Territory Government proposes to exempt certain LNG facilities from providing information to the Natural Gas Bulletin Board. 

The proposed exemption would apply to facilities that are:

  • principally operated as part of an LNG producing operation; and
  • connected directly or indirectly to the Northern Territory gas market solely through a pipeline facility at the location of the LNG producing operation.

The Territory Government claims the NT LNG projects operate differently to their east coast counterparts. The LNG projects engage in only very limited trade with the domestic market, as all gas for LNG is sourced from offshore fields and most of the gas produced is dedicated to LNG production. However, in the event that emergency or back-up gas supply is required, gas can be made available to the NT’s Power and Water Corporation via a smaller pipeline connecting to the domestic market. 

As a result, the Territory Government maintains there would be negligible benefit from the publication of information related to Territory LNG producers’ upstream facilities. However, the cost in terms of the administrative burden of reporting and the commercial disadvantage to the LNG projects from revealing operational data, would be considerable. 

The Territory Government argues that as a result of new Gas Bulletin Board reporting obligations under Part 18 of the NGR, the NT LNG facilities may choose to stop providing emergency back-up gas supply to the domestic market. 

The Territory Government considers the rule change is necessary to preserve the commercial incentives for Territory LNG producers to maintain their connections to the NT gas market and to continue with their emergency back-up gas supply arrangements.

Alternative sources of emergency back-up supply, it is argued, are likely to be more expensive and offer less security of supply than the existing arrangements. 

Consultation paper

On 7 February 2019 the AEMC published a consultation paper on the rule change request. The paper highlights a number of key issues:

  • The cost / benefit trade off of applying Part 18 of the National Gas Rules in relation to information provision requirements to the NT LNG projects.
  • The considerations of the NT LNG projects in maintaining emergency supply arrangements.
  • Scope to exempt the NT LNG projects from Bulletin Board reporting requirements under the existing rules.
  • Scope to exempt the NT LNG projects on the basis of a new exemption.
  • Issues arising from the offshore location of the production facilities.
  • The impact of any rule made on the application of the tranche 2 Bulletin Board reforms.

Stakeholder submissions on the consultation paper are due by 14 March 2019. Stakeholders are welcome to use a template for responses.

Background

In October 2018 a new rule started to enhance the breadth and accuracy of information provided to the market and the public through the Natural Gas Bulletin Board. The Bulletin Board, managed by the Australian Energy Market Operator, provides up-to-date gas system and market information to help participants make more informed decisions about trading, investing in, or using gas.

The new rule increases the amount and frequency of data reported on the Bulletin Board, along with greater data accuracy requirements and a stronger compliance framework.

The rule obliges certain facilities to be registered on the Bulletin Board based on a minimum 10 TJd threshold. With the completion of the Northern Gas Pipeline connecting the Territory to the wider east coast market in January 2019, NT facilities are now required to be registered on the Bulletin Board by 6 May 2019. 

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