Battle lines have been drawn between the gas industry and its critics over whether allowing fracking to resume in the Northern Territory could help solve the east coast energy price crisis.
The industry is using the idea of NT gas being a solution rather a problem to persuade the NT Government to lift its fracking moratorium by the end of this year.
Gas companies are arguing that bringing more supply into the domestic market will bring down prices.
"Supply is needed to put downward pressure on domestic gas prices. And that is simply supply-demand economics," Santos CEO Kevin Gallagher said.
The big LNG producer, generator and retailer Origin Energy has the same position.
"We'd expect improved and increased supply would ultimately lead to a competitive environment and lower cost to consumers," its unconventional exploration manager David Close said.
Their assertion is supported by corporate analysts including Deloitte's Australian oil and gas lead Bernadette Cullinane.
"We'd expect improved and increased supply would ultimately lead to a competitive environment and lower cost to consumers," she said.
NT won't supply cheap gas: IEEFA
But analyst Bruce Robertson from the green-tinged Institute for Energy Economics and Financial Analysis points out that the Territory is a remote, high-cost location, with high pipeline transport costs.
"Producing high cost Northern Territory gas, which is very high cost gas, about $7.50 a gigajoule, is no way to bring down the cost of gas on the east coast of Australia," he said.
He blames the big companies for high prices, because they have committed to selling most of their gas overseas under long term contracts.
Under those contracts the companies are getting paid less because, ironically, international oil and gas prices have fallen due to a global glut.
"They simply cannot produce the gas cheaply enough to make money on their export business," Mr Robertson said.
"But what they're doing is they're making that up by gouging the east coast consumer.
"The high price is entirely due to cartel-like behaviour."
The companies are rejecting the accusation they are running a cartel.
"I think that shows a fundamental misunderstanding of Australia's east coast gas market, what export contracts and oil-linked export contracts mean, and what it means to be a stable investment ready destination, honouring and meeting its contracts," Mr Close said.
But Mr Robertson thinks the big producers are uneconomic.
He believes they are pursuing Northern Territory gas because they contracted to export more gas than they had access to, and invested in more LNG processing capacity in Queensland than they could fill.
"They are pursuing a loss making business because they basically can't afford to write off their plants at Gladstone," he said.
"And that is what in the end will happen, I believe, to at least half of them within two years. I believe you'll see them shut down, because they are the high cost producer in the world and we are in a massive global glut of LNG.
"Barring some major supply disruption like a geopolitical event, like a war, the glut's not going to go soon."
Mr Robertson is arguing that unless there's a big international price increase, Northern Territory gas will be too expensive for either the domestic or export markets.
"You cannot be producing gas at $7.50 and selling it for $6.90 on the spot market in Japan, as you are currently, it just doesn't work," he said.
But the companies believe the Territory's remote Beetaloo Basin, south of Mataranka, contains such a large and high quality resource, it shouldn't be written off.
"Commerciality at this point cannot be known without more data," Mr Close said.
"It will really come down to the well performance, the amount of gas that each well produces, the amount of liquids that each well produces and the cost of those wells.
"And until we know those data, these predictions made by analysts, they aren't accurate, they're based on false assumptions without data."
More work is needed: Santos
According to Santos chief Kevin Gallagher, the economics — and whether development is worthwhile — are unknown until the explorers can appraise and test the resources underground.
"Santos is positioning itself as the lowest cost onshore developer of gas resources across onshore Australia, and as such, we are confident that if it can be developed economically Santos will be the company that can do that," Mr Gallagher said.
Central Australian producer Central Petroleum is continuing to develop its operation in Mereenie field near Alice Springs, because that doesn't require fracking.
Its managing director Richard Cottee is bullish about the prospects for expanding the Territory gas industry because he expects the cost of piping gas will come down.
"COAG and the Federal Government have bit the bullet of pipeline reform, the first tranche of which went through in August," he said.
"That will reduce the costs of piping gas, and also give the economic signal to encourage more investments in increasing supply."
Deloitte predicts the global gas glut will last until 2024.
Ms Cullinane is warning the United States, Russia and Qatar are producing gas at a fraction of Australian costs.
"There is a gap, that we need to very actively work on to close, but that being said, we can bring to bear some of the newest digital technologies and predictive analytics to be able to reduce that gap," she said.
And she believes Darwin has the potential to become a major gas hub.
"I believe the Northern Territory can turn its competitive disadvantage, its remoteness, into an advantage, and the way to do that is to co-locate companies in a cluster," she said.
"Darwin LNG has been joined by Shell, with the development of Prelude LNG and the Supply Base in Darwin, as well as Inpex, a massive project with onshore LNG processing, so it's now truly a tipping point where the Territory can become a global leader in gas."