With the failure of government comes a market solution, from Reuters:
AGL Energy is considering importing liquefied natural gas (LNG) to southeastern Australia from 2021, in a move that could ease the grip on supply that four producers led by ExxonMobil Corp hold in the region.
Australia is on track to become the world’s top exporter of LNG, but that is paradoxically creating a shortage at home as gas is pulled away from local markets in the southeast.
AGL on Monday said it was running a A$17 million ($13 million) study on building an LNG import terminal and aimed to make a final investment decision in 2018-19 on a project that it estimated would cost between A$200 million and A$300 million.
It has identified a number of sites and a terminal could be available by 2021, according to slides prepared for its investor day on Monday.
A map highlighted imports could come from as far away as Europe, the Middle East, Africa, the United States and Asia, despite the fact that by then Australia will have 10 plants exporting LNG.
“We are really staring through the looking glass when the world’s largest exporter of LNG is considering importing gas in the face of unaffordable domestic prices,” said Bruce Robertson, an analyst at the Institute for Energy Economics and Financial Analysis.
More at The Australian:
“There are challenges getting good prices and secure supply in the domestic market,” Mr Vesey told The Australian yesterday.
“We have gas customers and … from what we have been seeing in the market, we think we have to do more.”
…AGL’s move would be a shot across the bow for gas suppliers and exporters such as Shell, Origin Energy and Santos, with the message that they need to pay more heed to the domestic market.
If investigations keep looking favourable and AGL can secure enough gas from an LNG exporter, Mr Vesey said construction could start in 2018-19 with first gas being imported in 2021.
Mr Vesey said there could be more domestic gas demand as Australia attempted to securely transition to cleaner energy from coal-fired power — something that is happening quicker than many expected after this month’s announcement that the Hazelwood brown coal-fired power plant in Victoria would close early next year.
Here’s an idea. Instead of some panic-driven embrace of gas power as the baseload back-up owing to one SA storm, why don’t we let the market determine the best and cheapest mix of renewable energy supply which is just as likely to be industrial scale batteries as it is gas power.
For that matter, why don’t we break the east coast gas cartel instead of protecting it at every step?
The LNG import solution will help prevent some of the large scale industrial price gouging we are seeing currently but it won’t lift Australian competitiveness. On the contrary, with imported LNG the marginal price setter, it will guarantee that local prices lift to export parity plus liquification and shipping costs, permanently wiping out any advantage we had from cheap gas.
Worse, because gas sets the marginal price of electricity on the east coast, imported LNG will permanently shift power prices higher for business and households as they cross-subsidise the same gas carteliers that mis-allocated their capital into loss making export white elephants in the first place.
It’s just as well that Australians are lazy and stupid because if they had the faintest notion of what’s really going on here they would be erecting a guillotine in the city square.
