The Mereenie and Palm Valley joint ventures in Australia's Amadeus basin have advanced plans to supply gas to the Northern Territory's Power & Water Corporation (PWC) through 2034. The partners have signed a binding letter of intent (LOI) with PWC, enabling the immediate start of early works for a four-well drilling program. This program includes two wells at each field, with drilling scheduled to commence in mid-2026.

Drilling Program and Early Works

The early works, managed by operator Central Petroleum, involve ordering long-lead items, progressing civil works, and selecting a drilling rig. The LOI includes a provision for PWC to reimburse the joint ventures for these early costs if binding Gas Sale Agreements (GSAs) are not finalized by the target date of 20 February 2026.

Strategic Importance and Market Impact

The new wells aim to utilize existing production capacity to quickly bring additional gas to the market. Central Petroleum's CEO stated the campaign targets delivering gas equivalent to over 20% of the Northern Territory's total demand from mid-2027. This supply is emphasized as reliable, coming from conventional fields with proven reserves, which is crucial for the Territory's energy stability. The initiative is positioned as a response to a near-term shortage and long-term uncertainty in the domestic gas market, exacerbated by the scheduled closure of the Northern Gas Pipeline until March 2026.

Joint Venture Structure and Recent Context

The Mereenie joint venture comprises Central Petroleum (25%, operator), Echelon Resources (42.5%), Horizon Oil (25%), and Cue Energy Resources (7.5%). The Palm Valley joint venture consists of Central Petroleum (50%, operator), Echelon Resources (35%), and Cue Energy Resources (15%). This new agreement builds upon existing supply arrangements. Two new wells at Mereenie were completed in February following earlier GSAs with PWC for sales up to 2030, and a separate supply agreement was signed with McArthur River Mining for 2026-2027. The last drilling attempt at Palm Valley in 2022 faced challenging conditions.

Agreement Terms and Outlook

The LOI outlines non-binding terms for long-term gas supply from the new production, pending final internal approvals from all parties. The partners plan to formalize and execute binding GSAs by February 2026. The development is characterized as a win-win, securing local, reliable energy for the Territory while benefiting the ventures, their stakeholders, and the local economy.