The NSW government’s high-level summit on the state’s energy security this Thursday is triggering all sorts of hand wringing around gas prices. According to The Australian, a gas crisis looms for the state and the solution is to abandon environmental concerns in favour of coal seam gas development:
THE regulation of coal-seam gas in NSW is frozen and the industry at a standstill, with important legislation deferred, environmental standards not implemented and the state failing to institute federal scientific protocols to protect water resources.
NSW was embarrassed yesterday by a COAG Reform Council report that revealed the state had again failed to implement a process to refer CSG projects to a federal scientific committee that considers water quality issues.
The state government had agreed to implement necessary legislative changes by March 31 this year, and is the only state that has failed to do so, despite the federal government offering $20 million in incentive payments.
The findings build on long-standing concerns about the slow progress in NSW to unlock vast reserves of gas and comes as the NSW government prepares to hold a summit this week on energy security. NSW Treasurer Mike Baird warned at the weekend that the state’s supply contracts were running out and replacement gas had to be found, making it critical that the community found a balance between economic need and environmental concerns over CSG.
NSW currently imports 95% of its gas from Victoria and Queensland. Locally produced gas is seen as the solution because Queensland gas is increasingly headed to North Asia as LNG at a landed price around $16mmbtu. NSW’s traditional price around $3-4 can’t really compete even after the $5-6 in liquifaction and shipping costs.
The AFR meanwhile reports that:
An ambitious plan to link the Northern Territory’s natural gas pipeline system to South Australia’s to supply gas from the north to energy-short NSW is being pushed by territory Chief Minister Adam Giles.
Mr Giles said he had held initial discussions with South Australian Premier Jay Weatherill about a potential new pipeline between Alice Springs and Moomba that would open up new markets for NT gas project developers and stimulate investment.
He has also contacted NSW Premier Barry O’Farrell about the idea, and has invited NSW utilities to discuss potential gas supplies from the NT.
…“If there is an energy security issue in terms of gas for NSW, I think the Northern Territory has the ability to respond to their needs in a very short time,” Mr Giles told The Australian Financial Review.
He said a pipeline link between the NT and Moomba, the Santos-operated gas processing hub in South Australia’s north, would “bring opportunities down there and I’d be very keen to work with the South Australian government to see how we might be able to progress that and if it’s a viable option”.
The pipeline would have to be about 830 kilometres long and would cost hundreds of millions of dollars.
Mr Giles said links were also possible between the NT and Queensland grids, between Tennant Creek and Mt Isa.
But that could mean the line acting as a “hose” to siphon NT gas offshore through the Gladstone LNG export projects, rather than the NT helping Australia’s energy security, he said.
Mr Giles has put his finger on the real problem here. No matter where the gas for NSW comes from, whether it is imported from other states or produced within the state, the incentive to “siphon” gas offshore will be there, exposing the local price to the North Asian price.
Until recently, NSW had its own proposed LNG developments in Newcastle, as well as new pipelines mooted linking it with the Surat Basin and thence Gladstone.
The simple fact is that the greater the integration of eastern seaboard gas markets the less likely that NSW will be able to control its own gas price. Gas reservation won’t work unless the entire eastern seaboard is corralled from exports. and there’s no national policy for that.
You might argue that NSW should produce CSG like the clappers and join the export push, but the potential volumes are only going to make a small dent in the regional price, if at all, and are obviously going to run into greater environmental problems (quite rightly in some cases).
Perhaps the NSW government would better off supporting the US push to deliver high volumes into North Asia!
