Woodside bids to join east coast gas cartel

It’s all so horribly predictable. Via the AFR:

After announcing that the world has arrived at a “new era for energy”, Coleman asked: “Where is the vision from our leaders today?”

…”as renewables achieve scale, we risk wasting money on building more power into the system, resulting in generation overload. We risk ending up in a situation like Germany, where the growth in renewables without a corresponding increase in gas-fired power has resulted in issues with intermittency and overcapacity – and failure to reach emissions reduction targets.”

…Coleman then accurately described the genesis of the east coast’s gas problem. The onshore producers have not developed resources anticipated by their collective $80 billion development…”Politicians responded by threatening intervention in export markets with tools that have undermined security. This has in turn created a climate of uncertainty that is perilous for new investment and can jeopardise new supply,” he said,

“The reality is there is no simple fix to the east coast gas crisis. But there are options for ameliorating it. I’m definitely not talking about a west-east pipeline…A much more sensible approach is to establish a ‘virtual pipeline’, linking eastern gas markets to multiple sources of supply via one or more import terminals.”

Much more sensible for whom? The answer is Woodside not Australia.

To be honest, I’m not a huge fan of the West-East pipeline either. It implicitly relies upon successful WA gas reservation which is hardly fair given the pipeline might also break it. But LNG imports are no solution at all. All they will do is guarantee the east coast pays the Asian price plus the cost of the importation plant. In other words we will also pay for digging up the gas, piping it, freezing it, shipping it to Asia, then back again, unfreezing it, and piping it locally.

I don’t know how anybody, even a miner, can recommend this with a straight face. But then, it would aid Woodside, creating a new Asian-priced source of demand on the east coast for its gas. It might therefore even help undermine the WA domestic reservation policy over time.

We simply have to bite the bullet and apply retrospective domestic reservation. As Coleman says, the failure of supply is the fault of the export cartel. It is a scoping failure of their projects. Why should everyone else pay to bail that out?

To wit, via The Australian:

Incitec Pivot has fired a fresh warning over the future of its Gibson Island fertiliser plant and tips strong economic growth in North America to persist despite concerns over a potential US recession in 2020.

The explosives and fertiliser maker said its Brisbane plant would be forced to shut by the end of 2019 unless a new gas deal could be struck, with the company already facing a $50 million cost hike this fiscal year.

It has yet to secure any gas contract offers for the 2020-21 period and said it was now at the mercy of east coast suppliers.

IP is you and your crazy gas and power bill.

Comments

  1. What would China do ?
    My guess is that they would ban exports until all domestic benefits of cheap energy were attained.

  2. This import terminal idea just won’t die. The leeches have made up their minds and it’s only a matter of time before the government announces it. Probably under the guise of a jobs booster once the housing construction industry really starts bleeding workers.