"Following advice that Council was unsuccessful in its application for the $14 million project, Council will work on obtaining more information to put in a new proposal," Mayor Quilliam said.

"We have been advised that this would be best timed to coincide for the next round of Regional Development Australia funding in the middle of this year."

Mayor Quilliam said a number of Circular Head businesses would benefit from the extension of the gas pipeline and it would act as an added incentive to other possible developments.

"Businesses such as the new milk processing facility, Murray Goulburn and McCain are all businesses that could benefit from such infrastructure and while it is disappointing Council has not been successful this time, we will refocus and look to the next round," Mayor Quilliam said.

"The gas pipeline offers the opportunity to access an alternative and affordable power source, which would not only assist existing businesses but also offer incentives to new industries to invest in the area.

"Following the decline in forestry and timber processing sectors, this is exactly the kind of infrastructure Circular Head needs."

The project would require a polyethylene (plastic) pipe, of about 28km in length, to be extended from Port Latta through Smithton to McCain's potato processing factory.

The Council is seeking either funding for part of the project and is prepared to consider contributing to the project if necessary in conjunction with industry, state and other federal funding if applicable.