Securing Australia’s domestic gas supply: issues paper

Submission on Securing Australia’s Domestic Gas Supply

Submitted by Tamboran Resources Limited to the
Department of Industry, Science and Resources (DISR)

August 2022
About Tamboran Resources Limited
Tamboran Resources Limited (Tamboran) is a natural gas company that intends to play a constructive role in the global energy transition towards a lower carbon future, by developing low carbon dioxide (CO2) unconventional natural gas resources in the Beetaloo Sub-basin within the greater McArthur Basin in the Northern Territory of Australia. Tamboran’s key assets are a 25 per cent working interest in EP 161 and a 100 per cent working interest in EP 136, EP 143 and EP(A) 197 which are located in the Beetaloo Sub-basin.

Summary
 Declining east coast gas production and a structural gas shortage is threatening the future of
Australia’s energy security. The Australian Government expects a shortfall of gas in the east
coast market in 2023 with the LNG supply-demand imbalance predicted to worsen in coming
years.
 Existing supply and the current design of the Australian Domestic Gas Security Mechanism
(ADGSM) are insufficient to avoid this gas shortfall and prevent the challenges faced by
producers, which will have serious consequences across Australia and worldwide.
 Urgent government action is needed to increase supply as well as reduce the costs and
barriers for new gas producers in the Beetaloo Sub-basin.
 Unlocking the world class Beetaloo Sub-basin is likely the single most cost and time effective
way to strengthen the security of Australia’s domestic gas supply.
 The gas resource in the Beetaloo Sub-basin has only 2-3% reservoir CO2 with low impurities
(such as sulphur and inerts), making it one of the lowest emission sources of energy compared
with Australia’s existing gas fields.
 Australia needs gas from the Beetaloo Sub-basin to come online as early as possible to meet
east coast demand and to facilitate an orderly energy transition to a decarbonised
economy.
 In a 2025-2030 timeframe, Tamboran can provide the Australian government with a material
commitment for new, affordable gas to meet Australian and international demand while
supporting the global energy transition in line with Australia’s climate goals.

Increasing gas supply in the Beetaloo Sub-basin
Tamboran is proposing a cost effective, efficient, and low-emissions energy production solution to improve Australia’s domestic gas security and global energy security. Through its assets in the
Beetaloo Sub-basin, Tamboran has a potential solution to Australia’s domestic gas supply that meets the core principles of the ADGSM review and effectively balances the different objectives and implications of improving Australia’s domestic gas security.

1. Ensure sufficient supply of gas to the domestic market to support manufacturing and energy
security

Tamboran can potentially ensure Australia’s domestic gas shortfalls are met by 2025 in an
exploration and appraisal success case. Tamboran is not contractually committed to supply gas
overseas and would commit to supplying some of its gas to the domestic market by 2025.
Tamboran’s EP 136 Maverick Pilot project could be able to provide up to 100 TJ per day by 2025
to the domestic market if the right support mechanisms are enabled by Government and
infrastructure augmentation or upgrade is facilitated. By 2030 and through the development of
additional pipelines, Tamboran plans to deliver around 1 BCF per day to meet Australian domestic
demand and potentially backfill existing LNG plants or new greenfield LNG.

2. Put downward pressure on domestic gas prices.

Additional gas supply from the Beetaloo can put downward pressure on domestic gas prices and
provide necessary low-cost gas for local industry and manufacturing. Tamboran’s expert team
from the US brings immense unconventional energy expertise and cutting-edge technology to
accelerate cost reduction and productivity improvements. Drilling costs are expected to reduce
through efficiencies, pad drilling, completion optimisation and enhanced supply chain and
procurement. Tamboran’s aspiration is to be one of the lowest cost gas producers for the
Australian and international market by utilizing significant shale expertise and infrastructure
partnerships.

3. Maintain Australia’s position as a leading contributor to global energy security

Gas from the Beetaloo has the potential to improve Australia’s position as a leading contributor to
global energy security. The current global energy crisis is largely due to Russia, who is ratcheting
up pressure on gas-dependent European economies. However, the geopolitical energy shock of
2022 may be an example of the many future challenges Australia may face in the 2050 Net-Zero
energy transition. The Beetaloo has the potential to supply Australia, the Asia-Pacific and Europe
for more than 50 years with more than 100 TCF recoverable gas resources and multiple pathways
to market. Beetaloo gas has the potential to cement Australian energy resources as vital for
international energy security due to its low cost, abundance, low GHG intensity, and multiple
pathways to market.

4. Respect the trust that trading partners and international investors have shown in Australia’s
resources and energy sectors

Tamboran respects the trust of trading partners and international investors and is working with US
investors and partners across Asia to commercialise the Beetaloo Sub-basin. In light of AUKUS, the
Beetaloo is a brilliant opportunity to increase collaboration between Australia and the United
States for the improvement of global and domestic energy security. Tamboran’s board of
directors and key management team have a track record of early-stage E&P success in Australia
and the United States and will continue to bring significant experience and investment to the
Beetaloo. Tamboran is committed to working with investors, government, landholders, Traditional
Owners and other key stakeholders to accelerate the commercialisation of the Beetaloo Sub-
basin.

Furthermore, the Beetaloo Sub-basin has the potential to be one of the lowest cost producers of
gas into Asia and can utilise and leverage existing investment and infrastructure in Darwin and
across Northern Australia. Tamboran will work with existing international investors and countries to
provide alternative sources of low cost and reliable natural gas.

5. Supports energy transition in line with climate action goals

Unlocking the Beetaloo Sub-basin gas resource and displacing coal-fired power generation is the
single largest emissions reduction project currently available in Australia, and will make the largest
contribution towards achieving the Paris Agreement objective of limiting global temperature
increase to well below 2°C above pre-industrial levels. Furthermore, as the world transitions to a
decarbonised economy, gas from the Beetaloo can provide an orderly energy transition.
Gas has a central role to play in displacing greenhouse gas (GHG) emissions from coal-fired
power production, which is the dominant form of power generation both in Australia and around
the globe. Tamboran's strategy is to reliably supply Net Zero Scope 1 and 2 emission natural gas to
the Australian domestic market and overseas customers. Natural gas from the Beetaloo has only
2-3% reservoir CO2 with low impurities (such as sulphur and inerts), making it one of the lowest
emission sources of energy compared with Australia’s existing gas fields.

Based on Tamboran's production forecast from its 22 TCF development plan, the Company has
potential to produce approximately 3 BCFD of natural gas (22 MMTPA). By using Tamboran's gas
from the Beetaloo and displacing coal in power generation, this could lead to a global GHG
emission reduction of 58,800,000 tCO2e per year. Gas from the Beetaloo, if utilised to its full extent,
could lead to a global emissions reduction that will be the equivalent to a 12% reduction in
Australia's 2021 total GHG emissions.

6. Enhance transparency and processes that support competitive pricing outcomes for gas
consumers

The Beetaloo Sub-basin is a resource of national significance and Tamboran believe that
transparency for the domestic market and consumers is vital. Tamboran will work with the Federal
and State governments as well as relevant market bodies such as the Australian Energy Market
Operator (AEMO) to ensure security and transparency of gas supply and pricing.

7. Minimise implementation cost and complexity for government and industry

The Beetaloo is the simplest solution to improve Australia’s domestic gas security for households
and firms. In order to unlock the Beetaloo, stronger policy and regulation is needed to protect
businesses from counterproductive litigation and activism as well as reducing the costs for
businesses.

Unlocking the Potential of the Beetaloo Sub-basin
The current gas crisis and impending long-term shortages require a focused strategy from the
Government to accelerate the commercialisation of the Beetaloo Sub-basin. Unlocking production of gas in the Beetaloo Sub-basin is vital for the supply of low cost and low GHG intensity energy to
Australian and international consumers. Government can incentivise and operationalise new domestic supply by developing a strategy that streamlines and removes some of the environmental and regulatory barriers that impede gas producers while improving practical investment into infrastructure that reduce the costs for producers. Furthermore, legislation on climate change should take into account the critical role gas will play over the transition period to a decarbonised economy.
Gas producers need strong and timely support from the government to ensure vital projects in the
Beetaloo are successful and Australia’s energy needs are met.

What is the Government doing currently?

Currently the Australian Government already has steps in place to address the opportunities present in the Beetaloo Sub-Basin. The Australian Government is developing the Beetaloo Strategic Basin Plan as part of the National Gas Infrastructure Plan for developing resource potential in the Beetaloo Sub-
Basin. Programs within the Beetaloo Strategic Basin Plan includes:

 The Federal Government Beetaloo Cooperative Drilling Program will provide up to $50 million
in grants for exploration for natural resources in the Beetaloo Sub-basin.
 These Government incentives are expected to support $200 million of exploration initiatives
and grant a 25 percent refund to operators on eligible exploration and development
expenditures.
 Developing the Beetaloo Sub-basin is estimated to generate 6,000 jobs by 2040 and an
increase in economic activity valued between $18 billion to $36.8 billion.

What are the remaining challenges?

The Australian Government needs to provide further funding and policy support to the transport of the Beetaloo gas resources. The key challenge for optimising the Beetaloo’s potential is baseless litigation from groups opposed to gas production. Additional challenges include approval processes and establishing adequate infrastructure and investment to support operations.

Improved regulation

The government should consider supporting, where possible, the removal of regulatory and environmental barriers that do not balance timely investment and production of resources, with environmental protection in the Beetaloo.

A. Environmental
Currently, major projects are at risk because of vexatious and counterproductive litigation that
creates unbearable cost, delays and additional risk for producers. These practices are
incompatible with true progress towards climate objectives, as it prevents incremental climate-
improving projects from proceeding, leading to a disjointed, challenging and frustrating energy
transition.

Instances of protest action against approved gas production projects cause unnecessary business
delays and consequences that impact the operations of gas production - in a period when
Australia and international partners urgently need increased security of supply. It is therefore
essential that the Australian and Northern Territory Government provide assistance and
guarantees to corporations attempting to produce in the Beetaloo Sub-basin to ensure that
unwarranted litigation and legal action does not impact the commercial operations and viability
of operational gas projects.

B. Streamlining Application Procedures
A lengthy and expensive process exists for entering into oil and gas projects, including Statutory
Approvals, Land Acquisition, Northern Territory Regulation, Commonwealth Regulation and Land
Rights. Therefore, Tamboran proposes that the multi-step process for launching new projects in
the Beetaloo should be streamlined by the Federal and Northern Territory Governments to
optimise the utilisation of gas resources. Tamboran recommends government consider reducing
red tape, as well as streamlining tax, legislative and environmental requirements and satisfactions
as part of a prospecting and production process. Ultimately, the removal of barriers and costs for
business combined with improvements to investment in the region will contribute to providing
enhanced accessibility to the Beetaloo Sub-basin.

Infrastructure and Investment

In order to unlock the Beetaloo, the Federal and Northern Territory Governments should encourage investment into key infrastructure for gas sourced from the Beetaloo Sub-basin. Partnerships with companies like Tamboran will incentivise foreign investment and provide stability to Australia’s gas production. Without investment and commitments from the Government to create adequate
infrastructure there will be considerably more operational risk and volatility, ultimately contributing to higher gas prices for Australian consumers and less domestic and international market competition.

A. Ports
The port facilities connecting the Beetaloo to international and domestic trading partners would
need to be enhanced to make sea freight an attractive option. This would include upgrading
Darwin Port operations and storage facilities. In particular, the Middle Arm Sustainable Industrial
Precinct should be developed into a state-of-the-art LNG exporting facility which serves future
industries like hydrogen, urea and other high value products in order to support increasing exports
to Australia’s international trading partners abroad.

B. Pipelines
Enhancements to the capacity of the existing Amadeus Gas Pipeline and the Northern Gas
Pipeline as well as others will be required to serve delivery to the East Coast Gas Market and ports
such as Darwin. Enhanced pipeline infrastructure in the Beetaloo will support projects in the region
and improve distribution to domestic and international trading partners.

C. Rail
Improvements in rail infrastructure and freight rail frequency will be required in order to increase
output from the Beetaloo. This would be aided through construction of rail sidings in key areas as
well as extensions of key lines serving the Beetaloo.

D. Roads
Upgrade options for key roads supporting the development of the Beetaloo will enable better
accessibility - the extent to which would be dependent on location and scale. Key roads that
would enhance accessibility to the Beetaloo would include Stuart Highway, Carpentaria
Highway, Western Creek Road, Buchanan Highway and Gorrie Dry Creek Road.

E. Aerodromes
Upgrades to existing local and regional aerodromes as well as the construction of new
aerodromes in the vicinity of the Beetaloo will be required in order to cater to FIFO workers and
serve as the supply chain solutions required to expend the energy industry in the onshore Northern
Territory.

F. Other
Accommodation facilities should be developed that are largely self-sufficient for power, water,
wastewater and telecommunications will be required to unlock the Beetaloo.

Community Engagement

The economic benefits of an onshore gas industry in the Northern Territory and development of the
Beetaloo Sub-basin can be shared regionally with local and Indigenous communities as well as the broader Australian population. On top of fiscal investment in the region, unlocking the Beetaloo will create positive economic and job opportunities. Effective land use agreements will ensure a mutually beneficial win-win arrangement between Government and communities, compensating locals for gas operations in the region.
Conclusion
Bearing in mind the serious consequences of a shortfall in Australia’s gas supply and the challenges for the global energy transition, unlocking the Beetaloo Sub-basin could be the Australian
Government’s best option for securing Australia’s and global energy needs in the near term. By supporting producers in the Beetaloo Sub-basin, the Australian government can potentially secure
Australia’s domestic gas supply at an affordable price, drive down global GHG emissions in-line with the Paris Climate Agreement and reinforce Australia’s position as a leading contributor to global energy security.

Tamboran and other prospective producers in the Beetaloo require government support through broad reforms on environmental legislation and practical investment into infrastructure to accelerate the region’s commercialisation.

Further information
For further information please contact us on (02) 8330 6626 or info@tamboran.com.

Sources https://territorygas.nt.gov.au/projects/beetaloo-sub-basin https://www.industry.gov.au/data-and-publications/unlocking-the-beetaloo-the-beetaloo-strategic- basin-plan https://cmc.nt.gov.au/__data/assets/pdf_file/0005/1052897/q19-0139-kpmg-final-report.pdf https://www.industry.gov.au/data-and-publications/unlocking-the-beetaloo-the-beetaloo-strategic- basin-plan https://www.energy.gov.au/publications/2021-national-gas-infrastructure-plan https://www.industry.gov.au/sites/default/files/2021-05/beetaloo_sub- basin_gas_development_study.pdf