Ah yes, the gas cartel:
ExxonMobil has hit back at suggestions that tapping into Queensland LNG exports can fix a projected gas shortfall in the southern states, saying there are physical pipeline constraints that underscore the need to develop local supplies in Victoria and NSW.
…“One popular idea is to redirect existing production away from export markets and toward domestic markets to ensure supply and achieve some notional price target,” Exxon’s Australian commercial director, David Berman, told a gas conference on Tuesday.
…even if future available and planned pipeline capacity was fully utilized every day of the year, production from Queensland could still only supply around 30 per cent of southern state demand in an average year,” Mr Berman added.
Australian Energy Producers chief executive Samantha McCulloch also weighed in on the escalating debate and said the time for talk was over.
…“After more than a decade of energy policy missteps and inaction, Australian households and businesses are facing higher energy prices and increased risks of blackouts and gas shortages,” Ms McCulloch said.
…However, Cooper Energy CEO Jane Norman said the legislation caused long-term pain.
“The price cap pushed supply back by at least two or three years,” Ms Norman said.
…If Australia is unable to develop replacement supplies, the country’s east coast may have to turn to importing LNG.
Tamboran Resources CEO Joel Riddle, who’s company is looking to tap the Beetaloo Basin the NT, said that would jeopardise energy security.
“The Beetaloo is the silver bullet to solve the east coast gas shortfall,” he said.
“The last thing this country needs is to connect its energy security to the Middle East or Russia.”
So, let us try to pluck individuals from the writhing mass.
- Exxon doesn’t want gas to move south from QLD because it is running off its legacy assets in Bass Strait. More QLD gas would lower the value of the remaining gas.
- The south must find roughly 100Pj of gas per annum for the energy transition. We should reserve about 10% of East Coast LNG export volumes. The Moomba-Sydney pipeline has a nameplate capacity of nearly 500Pj and can handle it (if not, expand it).
- Samantha McCulloch is the feminised face of the gas cartel lobby. Disregard with prejudice.
- Shareholders should sack Cooper Energy CEO Jane Norman if she held back investment for two years despite the stratospheric margins offered by the $12Gj price cap.
- LNG imports won’t hurt, especially since they will come from the US, not Russia. But, as we saw in the recent collapse of the Venice Energy LNG import deal, the gas cartel will also dominate these volumes if not controlled. So, any LNG import capacity must be publicly owned.
- Any supply-side expansion, including Beetaloo, is useless, while the LNG cartel can vacuum it up and ship it out.
The answers are easy. The East Coast Gas Market has failed, so stern and structural intervention is needed:
- Labor must coordinate the states in a proper east coast gas reservation system modelled on WA.
- Or, apply an export levy on all East Coast gas exports to make local supply as attractive as offshore and collect untold billions. The levy revenues should be cut to reward producer states so QLD would make a mint.
- If new pipelines are needed, they will be relatively small and can be built.
These basic measures instantly crater East Coast gas and electricity prices and smooth any and all issues in the energy transition.
If rentiers fight you on it, legislate “use to or lose” laws and seize assets for a national gas company.
Forget about China and Japan. They have more gas than they need and are reselling it!
The only problem with East Coast energy—THE ONLY PROBLEM—is the nest of gas monopolists clogging up the network.
A quick spray of regulation, and we’ll be alright, Jack.
