Time to build the Trans-Australian gas pipeline?

Via Colin Barnett at the AFR:

A modest reservation of some of that gas for the Australian market is just good policy. It’s not a sovereign risk, because it is our gas. With less than half the emissions of coal, it makes sense to put more gas into our energy mix. It might also help the energy industry to regain some of the loss of public support among local consumers.

…I have for the past two years advocated for the construction of a Trans-Australian Gas Pipeline from the north-west coast, where around 90 per cent of our gas is, to the existing gas distribution hub at Moomba in South Australia…the current wholesale price of gas in Western Australia is around $3 to $4 a gigajoule compared to $9 to $11 a gigajoule on the east coast. The pipeline transport cost would be around $3 a gigajoule, leaving a significant margin.

Long distance pipelines are common throughout the world. For the east coast, a Trans-Australian Pipeline offers a reliable and cheaper supply of gas. The alternative of exporting LNG out of Queensland while at the same time importing LNG into Victoria and New South Wales, does not pass the pub test. It implies liquifying Australian gas, shipping it around the coast and then re-gasification. It would also leave Australian consumers exposed to world LNG prices, which are likely to rise significantly from the mid 2020’s.

I don’t think global gas price will rise then but the AUD will fall and that amounts to the same thing for export-benchmarked local prices. Moreover, we already have a chronic local price gouge going on.

I wouldn’t build it with private money. Make it a public asset with a constitution to provide the cheapest possible gas. That might get the delivered price down to $5-6Gj. It also forms the germ of a much needed national gas company that can be used to pressure the east coast cartel ongoing.

The real question is would it result in higher WA prices and be self-defeating? The east coast will need an additional 200Pj of gas in about five years. WA domestic consumption is only around 400Gj now so we’d be adding 50% of new demand in short order.

WA also exports roughly 2600Pj a year via LNG so there’s plenty of gas if we can get our hands on it. But the present WA gas reservation policy only holds back 15% of export volumes so it would probably need to be lifted substantially.

Needless to say, it must also be reserved gas to prevent the east coast gas cartel from stealing it.

I don’t how hard these gas sourcing issues are but if it is possible then it makes a damn side more sense than LNG imports.

David Llewellyn-Smith
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  1. Jumping jack flash

    “I wouldn’t build it with private money. Make it a public asset with a constitution to provide the cheapest possible gas.”

    I wouldn’t either, but its more a case of if the government does anything substantial, and the slightest thing goes wrong with it, it is met with howls from the opposition and a right royal rogering from all sides by the MSM. Look at the NBN. Look at any government-operated public service going back about 30 years.

    These days, more than ever, it is much easier to just let the private sector do everything, and the government just throws them a bit of public money (if it can get away with it). The private entity gets their exorbitant usage fees, and nobody can complain about the government’s performance or lack thereof, and so the government has its arse protected from scrutiny and criticism going into the next election. Its win/win.

    • If only we could fix the real problem by having a non-corrupt and competent government leadership.

    • The ALP is corrupt. It spent $1 billion on Myki when there was a perfectly good ticketing system operating in Hong Kong and London – maybe even Sydney. Victoria was not the first place in the world to order a smartcard ticketing system. They should have simply purchased an existing system off the shelf instead of reinventing the wheel – and the wheel is not even as good as the wheel in London (which allows passengers to use their contactless credit card to travel by train).

    • HadronCollisionMEMBER

      I think the nbn is an apt and inapt comparison simultaneously

      Just as many vested interests
      Just as clear a mandate
      Way way way less technical bullfish surrounding the approach

      • The ALP? Holy God, Australians deserve everything they get… they’re worse than Trumptards

  2. Over 40 years later the vision of Whitlam’s Minerals and Energy Minister, Rex Connor has been more vindicated. As he told Parliament when defending the scheme for a cross continental gas pipeline:

    “”Give me men to match my mountains,
    Give me men to match my plains,
    Men with freedom in their vision,
    And creation in their brains.””


  3. Isn’t the number 1 option just to have a gas reservation policy on the east coast?
    Didn’t Centre Alliance secure gas reservation from the gov in exchange for passing the tax cuts? Where is it?

    • Very good point!

      I forgot about that deal.

      Centre Alliance has received a written guarantee outlining the Morrison government’s gas policy, which the key minor party demanded

  4. david collyerMEMBER

    The supply security benefits of a WA-Moomba gas pipe are immense. Cost estimate is about $6b. There is ~$4b in the Northern Australia Infrastructure Fund embarassingkly unused. (Disclosure CTP:AX)

  5. If the pipeline goes ahead the crooks in Canberra have no incentive to enforce domestic reservation and will use this to fake claim they are doing something. Then the price of gas goes up in WA and the thieving cartel continue to rob us blind assured no one at any time will try to stop them.

  6. bolstroodMEMBER

    At first glance LNG is a cleaner fuel than coal.
    But there are some down sides,such as leakage of methane, the pollution in transporting gas through pipelines
    New reports on fracking find serious harms, the north american continent is a highly fractured landscape caused by Fracking.
    Fugitive emissions are much greater than the industry calculated.
    This is Methane we are talking about , a very powerful Greenhouse gas, albiet not as long lasting as CO2 in the atmosphere

    When Cape grim Air purity analysiis reported back in 2016 that CO2 emissions had passed 400ppm,
    there was a rider, that Methane was at 85ppm giving a reading of 485 ppm
    The mention of CO2 + Methane @ 485 ppm levels is in the paragraphs under the picture of the Polar Bear
    400ppm is the flag for a 2 degree above pre-industrial planetry tempreture, 485 puts us on course for 3-4 degrees.
    Gas maybe cleaner than coal, but it is fossil fuels in total that we must abate , immediately

  7. Macrobusiness just does not get it:
    the mess we see with Gas production/ditribution/domestic consumption is BY DESIGN.
    What is not to love about a situation where it costs $4 to get it out of the ground and you sell it for $15 to a captive market?
    That is why Santos is in on it.
    That is why a former board member of Santos who writes in The Australian can never, ever find any problem with the situation.
    Since it’s helpful to think the present Federal Government has the Mining Council’s hand up its fundament, playng it like a sock puppet one should never expect anything other than more actions that enable this $4->$15 arb or deaf ears to anybody saying that there is a problem.
    It’s pretty easy really. This is what you get when there is no oversight in the Legislature, no effective enforcement of the law on the Corporate realm….
    Welcome to ‘stralia, mate.

  8. Instead of hiring an expensive FRSU and all that expensive work digging up Port Kembla, why doesn’t Tiggy buy a 100 or so rail tanker cars, running a shuttle service across the Nullarbor Plain with cheap WA gas to the East Coast?
    Shipping of gas by rail is technically feasible and has been done in the past. Engineering consultants and contractors don’t like it as it lessens the value of construction work

  9. Forrest GumpMEMBER

    I can’t help but think that we are being scammed.
    This will be a public asset like the NBN or Snowy Hydro II and given to one of Scumo’s mates to build.
    Then in phase 2 it will get privatised to another one of Scumo’s mates with the tax payer carrying the debt and the new owner increasing the transmission costs

    Watch this space…