The NT Government should not bother with fracking, one analyst says.

Bruce Robertson from the Institute for Energy Economics and Financial Analysis (IEEFA) told an inquiry this week that the global gas glut, the potential for big cost blowouts and low royalty returns for governments mean the Territory should steer clear of the unconventional gas extraction.

“Government support for the industry is a misallocation of limited government resources,” he said.

“I think we shouldn't be following this rabbit down the hole, that's why it's a misallocation of resources.

“You shouldn't actually be here, because the decision should've been made before this inquiry was done that it wasn't a wealth-creating industry for the Territory.”

The comments were made at the second round of hearings for the inquiry, which is set to holding hearings in Alice Springs, Katherine and Tennant Creek.

The Labor Government imposed a moratorium on fracking until it knew more about the safety and value of the industry.

Mr Robertson said it would be very difficult for an NT gas industry to be competitive in a global marketplace.

“Producing high-cost onshore gas is not economic in a low-cost gas world,” he said.

“Qatar is the world's lowest cost producer … the fields that they were looking at developing in the NT, the production costs were $7.50 a gigajule. In Qatar, they're 20 cents.

“This is what we're competing against.”

“East coast Australian plants [are] the highest-cost plants in the world.

“We have had a global gas boom and after a boom comes a bust. Who is the plant that usually closes first? In the resources industry it's usually the high-cost plants.”

The Government is expected to release its next draft report in October, with a final report slated for the end of the year.