How to kill the Narrabri gas shocker

Via The Fake Left:

A former New South Wales judge has called for “independent” to be dropped from the name of the state’s planning commission after it approved the controversial Narrabri coal seam gas development, arguing the body is effectively controlled by the government.

The commission on Wednesday gave what it described as “phased approval” of the $3.6bn project in the state’s north. The decision, which included 134 conditions, was welcomed by the proponent, oil and gas company Santos, and the federal and state governments, but criticised by local farmers, conservationists and Indigenous traditional owners.

Paul Stein QC, a retired court of appeal judge now speaking as a committee member of the Centre for Public Integrity, said he was “deeply concerned” that the NSW Independent Planning Commission had been diminished by changes introduced by the government in March following complaints by mining and resources interests.

They included allowing the planning minister, Rob Stokes, to impose a tight timeframe in which a decision had to be reached and appointing new members to the commission.

“We believe the IPC shouldn’t have the word independent in the title anymore because they’re essentially under the control and direction of the minister,” Stein told Guardian Australia.

“This was a massive inquiry, highly technical, and it was ordered to be finished in 90 days, and that was only extended to 120 days because [Santos] put in further submissions. It is very hard for a tribunal or commission to withstand such intense political pressure.”

Stein said he did not want to comment on the development itself, but believed the process had been compromised.

He said a decision of the complexity of the Narrabri development could need up to six months to properly consider under normal circumstances, and feared that future applications for mining and resources developments that came before the commission “might be seen as a bit of a foregone conclusion”.

No shit. There is still a way to kill the project. Via Chanticleer:

…the Santos board will have to factor in the impact of the Port Kembla gas import terminal (up to 100 petajoules per annum) and the Port of Newcastle gas import terminal (about 110 PJ per annum).

The Port Kembla gas terminal could deliver substantial quantities of natural gas as early as 2022 – possibly more than 75 per cent of NSW’s gas needs. It has planning consent, the major engineering work is complete, the owners are in discussions with customers and the construction should be finished within 16 months of the final investment decision.

Narrabri is forecast to deliver 150 TJ of gas per day or 70 petajoules a year, and to supply up to half the gas demand in NSW.

Santos has told the market it has signed memorandums to supply gas from Narrabri to Perdaman, Brickworks and Weston Energy. It has not given details of these contracts but analysts believe it needs to earn $6 to $7 a gigajoule for its gas to make the project profitable.

Domestic gas currently sells for about $4 a gigajoule.

N0, it doesn’t. That’s spot gas, maybe 5% of the market. 95% of it sells on contract above $8Gj on a 14% slope to Brent:

Which offers manufacturers an insight into how they can work the gas cartel over here.

Narrabri is still out of the money at $8Gj. Indeed, I think it will need more like $10Gj over the long run and STO can deliver it as Brent prices rise back to $50-60 and it shifts more volumes to export as Narrabri comes online, keeping the market tight.

But, the chart offers an insight into how to beat it. If we have LNG import terminals up and running, Asian spot prices can deliver spot gas here today at $4-5Gj. Even contract gas can be secured from places as far distant as Qatar on a 10% slope to Brent, getting it here for a consistently cheaper price than Morrison unplan gas.

There is a risk in a falling AUD but that is offset by the likelihood that oil will probably also be weak during any period of AUD weakness.

Manufacturers should fund the terminals into existence urgently.

David Llewellyn-Smith

Comments

  1. Hamish McDonald was toothless on this this morning. I sms’d him about gas reservation and all the points MB has been going on about and asked him to ask the Santos CEO about it. And Roy Butler the SFF Party member (who seems VERY across the detail including reservation) but crickets. All McDonald wanted to focus on was what SFF would accept to move this forward.

    Jeez he is just disappointing.

    I will say though, Plibersek seemed VERY across the detail particularly about why we need domestic reservation.

    Roy Butler: https://www.abc.net.au/radionational/programs/breakfast/narrabri-butler/12720798
    Santos CEO: https://www.abc.net.au/radionational/programs/breakfast/santos-gallagher/12716454
    Plibersek: (mostly about unis) https://www.abc.net.au/radionational/programs/breakfast/plibersek-unis/12720850

    • Strongly encourage everyone to listen to the Shooters Fishers Farmers’ Roy Butler – he specifically identified what this is about – filling a domestic need because gas is being shipped offshore too cheap – mentioned reservation….McDonald went silent – flummoxed. Crickets. No idea how to respond.

      Butler is across the numbers and what is going on in WA – why we are paying more….

      • kierans777MEMBER

        MacDonald is a complete LNP shill. Talking up the so called “benefits” of the project. No questioning of whether the benefits will eventuate, nor willing to accept the costs. No discussion of Santos’ criminal misconduct in the past or the fact they can’t be trusted.

  2. I’m not sure why you’re so vexed about the gas cartel, DLS. At best, methane is just a stepping stone to a full or near-full RE power system. The main aim, the big prize, is to get RE up as quickly as possible, and as such this gas stuff is a distraction, a sideshow. I would encourage you to devote your not inconsiderable rhetorical and journalistic skills to furthering that cause and achieving that end. 💡

      • Yes, true, but the best way to stop it is to promote the alternative, you know, the thing that’s going to replace it.

        Shouting and stamping our feet about how awful and unfair and stupid it all is won’t help. Just go around gas and leave the whole thing as a stranded asset.

      • Case in point:

        Is it possible to decarbonize the economy of the United States, and get to net-zero emissions by 2050? A team of researchers from 15 countries who are part of the Deep Decarbonization Pathways Project think so, based on their deep modeling of the US economy as part of the UN Sustainable Development Solutions Network (SDSN). We introduced this work at a high level in Episode #129, during our conversation with Dr. Jeffrey Sachs, the Director of the SDSN. In this episode, we take a deep dive into the modeling itself with one of the modelers involved in the project. We’ll look at the specific energy technologies, devices, and grid management strategies that will make decarbonization by 2050 possible, and see why they think that decarbonizing the US is not only achievable by 2050, but practical, and very, very affordable.

        Podcast: https://media.blubrry.com/extraenvironmentalist/xepodcasts.com/assets/podcasts/energytransitionshow/ETS-131-decarbonizeby2050-mini.mp3

    • Display NameMEMBER

      The theft of consumers money involved in the Cartels ripping off with excessive pricing would make the dollars recouped by the robo debt scheme look like a rounding error. Orders of magnitude larger.

    • PaperRooDogMEMBER

      We don’t need this stepping stone especially one which costs us far more than if the government just allowed us to use the bridge (domestic reservation). This so called gas led recovery will mean Aussie’s & industry paying for extra they don’t have to & keeping us pretty uncompetitive for years. Not till mention further funding tar lobbying of the gas cartel & distorting the market even more in the future, no doubt.

  3. Only Australia could be so stupid as to spends billions building a gas import terminal in order to bring in gas (a fungible commodity) from overseas at a cheaper price than the locals producers are selling it. The same result can be achieved with the stroke of a pen by the Governor General.

      • Any renewable energy source that is cheaper than gas will come to market irrespective of which Gubmint is in power.

        If it’s economic, private money will make it happen. The only possible logistical impediment is linking up to the grid.

        • Any renewable energy source that is cheaper than gas will come to market irrespective of which Gubmint is in power.

          Slightly naive, but in the best of all possible worlds, correct in theory

          • Looks like cold fact to me. I’ve never met a businessman who turned his nose up at a surefire profit.

    • And no doubt it will, when someone realizes it will be cheaper and faster to short circuit the BS and do some swaps. E.g. via shipping gas sitting in the LNG tanks down the east coast, and vice versa in SE Asia, rather than pointlessly sending boats across the pacific.

    • PaperRooDogMEMBER

      Exactly! If our whole system wasn’t so distorted & corrupted by bad taxes, policies etc maybe we could be sending an unmanned craft to the moon instead of that little country called UAE that no doubt most of us would think Australia is superior to.

  4. Poor old Pax Rhetoric must feel a bit silly after rolling over and presenting himself on whatever it was he did that for to get the domestic gas reservation (chortle) up.

  5. haimona12MEMBER

    It will be interesting to see how the proposed new gas pipeline for this project gets on. I know a bit about gaining infrastructure easements and although things are tilted to the infrastructure developers, the landowners aren’t totally without rights, given the development requires not only the easement (where the pipeline is laid) but also access to the easement. There are apparently more than 500 affected property owners and they are unlikely to be big supporters of the gas development. Any delays add to the pipeline costs, defers production, and reduce the competitiveness of the new gas fields. It is possible the battle will now shift to the pipeline.

    • PaperRooDogMEMBER

      Hopefully it becomes a quagmire, though I fully expect some new law to be passed to prevent this

    • Unlikely. Projects of state significance generally have the balance of power even when landholders are given a say.

      “On 1 December 2016, reforms to the land access arbitration framework were introduced with the commencement of the Mining and Petroleum Legislation Amendment (Land Access Arbitration) Act 2015…..
      Under these reforms, an exploration code of practice was introduced for holders of petroleum prospecting titles….
      This code contains mandatory provisions to which petroleum prospectors must adhere. It also outlines best practice guidance to assist in negotiating land access arrangements.

      The reforms also extended the requirement for petroleum producers (not just petroleum explorers) to obtain an access arrangement with a landholder prior to entering the land. That access arrangement must specify the compensation that is payable to the landholder (section 69D(2))….

      Compensation need not always be monetary in nature. Often what is provided in-kind by the titleholder may be worth more than the actual monetary compensation. For example, the titleholder might agree to upgrade a farm road, renew a fence or replace a gate with a cattle grid.” AKA love jobs.

      My understanding was the projects are allowed to procede to arbitration when landholders refuse to engage in negotiation i.e. the revisions force an outcome, which enables land access for pipes (access, wells, trunks, water, whatever) when none is desired by the land holder. If you are land holder, you’d do well to hold out and make your negotiation business critical to the nearest bit of infrastructure.

      • haimona12MEMBER

        Yes agree with all of that, once a project has been accorded state significant status. There is nevertheless an abundance of caution over the actual exercise of those powers in the face of determined opposition for easements affecting so many landholders and local communities…

  6. “called for “independent” to be dropped from the name of the state’s planning commission …. arguing the body is effectively controlled by the government.”

    Well, duh! Any department that gets funded by the taxpayer is an arm of the State, irrespective. The RBA, for another example, is categorically not independent (except in the minds of a few impressionable people).