Key takeaways
The Northern Territory’s BUG regime is removing long-standing barriers by allowing appraisal gas to be commercially used, accelerating the path to production.
Initial BUG approvals and pilot projects, such as Shenandoah South, are demonstrating a workable bridge between exploration and full-scale commercial development.
The 2026 amendments enable shared infrastructure, cross-tenure operations, and CCS integration, creating a more flexible and investable environment for large-scale gas projects.
Recent regulatory reforms in the Northern Territory have materially reshaped the investment and development landscape for the Beetaloo Basin. At the centre of this shift is the Beneficial Use of Gas (BUG) regime, an aptly named policy “bug‑fix” that is removing long‑standing barriers to commercialisation. Taken together with the NT Government’s newly introduced Pipelines and Petroleum Legislation Amendment (Industry Development) Bill 2026, these changes have begun to unlock a viable pathway from appraisal to full‑scale gas production in the top end.
The Beetaloo Basin
The Beetaloo Basin is a shale gas play located in the Northern Territory. It is estimated that the sub-basin:1
- has more than 500 trillion cubic feet of discovered or prospective gas resources (based on industry estimates);
- could produce 6,000+ terajoules (TJ) per day;
- could generate $17 billion in economic value in royalties, employment and business growth.
Santos is currently eying the Beetaloo Basin as a “game changer” for the company2 and Inpex has recently announced a US$208 million joint venture (with options for a further US$411 million) which aims to fast-track development in the Beetaloo Basin.
What is the BUG framework?
The BUG framework, which was introduced into the Petroleum Act 1984 (NT) in late 2022 and commenced in June 2023, enables tenement holders to use or sell appraisal gas during extended production testing, rather than being forced to flare or vent. With Ministerial approval, appraisal gas can be redirected to power generation or even commercial sale.
A practical demonstration of this shift came in December 2025, when the NT Government approved a BUG application for Beetaloo Energy Australia Limited in respect of its Carpentaria Pilot Project, enabling appraisal gas that would previously have been flared to instead flow into the local market.
This followed the decision, in September 2025, to grant the first BUG approval under the new regime for Tamboran Resources Corporation’s (Tamboran) Shenandoah South Pilot Project (Shenandoah South),3 allowing the sale of up to 60 TJs per day for three years, providing a commercial bridge between the appraisal phase and full-scale development. The approval has been transformational for the project, which now holds all key clearances (including native title holder consent and NT Government authorisation) to commence gas sales. This includes a Gas Sales Agreement with the NT Government for up to 40 TJ/day, with sales targeted to begin 2026.4
These early‑stage gas sales underpin investment in enabling infrastructure such as the Sturt Plateau Compression Facility and associated pipeline works, the first dedicated link between Beetaloo gas and the Territory’s broader transmission system. Together, these steps have catalysed Shenandoah South’s Final Investment Decision,5 marking a pivotal shift from exploration to preliminary commercial production.
The positive impact of the BUG framework
While the Beetaloo Basin’s resource potential is significant (with government commentary suggesting the basin holds enough gas “to power the nation for 200 years”6) the region has long faced development challenges.
The Basin’s location positions it to supply gas to three markets: the NT, the East Coast grid and LNG export hubs in Darwin, making it not only a regional play but also a potential contributor to national energy security. However, exploration in the area has historically been tentative, constrained by limited shale expertise, modest investment and lack of suitable infrastructure. Developers have had to contend with long distances to existing pipelines, limited gathering systems, and the capital intensity of building new midstream assets from scratch. The Shenandoah South investments, including the Sturt Plateau Compression Facility and pipeline, represent the first meaningful steps in closing these gaps, but full commercial development will require broader network buildout.
Major producers are increasingly moving into the basin, attracted by the size of the resource and growing regulatory certainty. Farm‑ins, such as Inpex’s involvement via the Shenandoah South work program reflect the shift from frontier exploration to a basin now increasingly backed by large‑scale players capable of underwriting the next wave of infrastructure.
The 2026 Pipeline & Petroleum Amendments: Enabling flexible, integrated development
Complementing the BUG framework is the Pipelines and Petroleum Legislation Amendment (Industry Development) Bill 2026, introduced in March 2026. The Legislative Scrutiny Committee called for public submissions on the Bill by 27 March 2026.
Key reforms proposed by the Bill include:
Cross‑tenure transfer of petroleum
The Bill amends the Petroleum Act 1984 to allow petroleum to be transported across tenement boundaries for processing, storage, and transportation, reducing duplication and enabling shared‑infrastructure development across the basin.
Pipelines capable of carrying CO₂ and other regulated substances
Amendments to the Energy Pipelines Act 1981 and the Petroleum (Submerged Lands) Act 1981 allow pipelines onshore and offshore to transport CO₂ for carbon capture and storage (CCS) alongside hydrocarbons, aligning the NT with evolving decarbonisation and CCS‑integrated gas project models.
Modernised compliance and enforcement regime
The Bill introduces a contemporary compliance framework, including enhanced inspector powers and stop‑work provisions, ensuring transparency and operational safety in pipeline developments.
Future implications: A policy environment designed to unlock commerciality
The combined effect of the BUG reforms and the 2026 legislative amendments is a more investable, commercially feasible pathway for Beetaloo projects, with the NT Government firmly declaring the basin open for business, with major operator interest signalling growing confidence in the Basin’s long‑term economics.
The NT’s regulatory “BUG‑fix” is a clear signal of support to industry, and looks likely to set the Basin on a viable course toward full‑scale production.
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1 https://territorygas.nt.gov.au...
2 https://www.afr.com/companies/...
3 Tamboran Resources Corporation, ‘Tamboran secures Northern Territory Government approval for Beneficial Use of Gas from SS Pilot Project’ (ASX Announcement, 1 September 2025)
4 https://www.abc.net.au/news/20...
5 https://www.energynewsbulletin...
6 https://territorystories.nt.go...;
7 Beetaloo Energy Australia, ‘Beetaloo Energy Receives Final NT Government Approval for EP187 Appraisal Gas Sales’ (ASX Announcement, 9 December 2025)
8 https://www.abc.net.au/news/20...