The NT government approved the exploration of the Beetaloo basin in May after a five-year moratorium on natural gas projects, saying submitted plans had met the requirements of an inquiry into fracking.

NT Chief Minister Natasha Fyles green-lit the Middle Arm facility at the same time, despite strong opposition from environmentalists, traditional owners and farmers.

The inquiry, which passed the Senate on Tuesday with support from the federal government, will look into the role and funding intentions of governments and the likely and intended uses of the site.

It will also investigate any climate, environmental, health and cultural heritage impacts as a result of the development.

The NT government argues the Middle Arm facility would be a sustainable alternative to help transition the territory to renewable energy.

Tamobran Resources, a gas company planning to frack in the Beetaloo basin, has been revealed as a major tenant of the facility.

The NT's peak conservation body said it welcomed the inquiry, arguing the facility has been used purely to prop up the Beetaloo Basin "carbon bomb".

“Public funding of Middle Arm is a fossil fuel subsidy," NT Environment Centre director Kirsty Howey said.

“We are confident that, with proper scrutiny, this disastrous project will never see the light of day.

"Whose interests are being served by establishing an enormous gas-powered industrial precinct just 3km from Palmerston and Darwin? It certainly isn’t Territorians."

The Environment and Communications References Committee will hand down its report by January.

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