Australian gas industry gets major vote of confidence

February 2nd, 2017

Australia’s natural gas industry had a significant vote of confidence from one of the most experienced investment houses in the world this week, when EIG backed a Senex project in south-western Queensland.

EIG is a Washington-based energy investment house with a very long and successful track record.  Its $400 million investment is an enormous boost for Brisbane-based Senex, and Australia’s East Coast gas supply.  Senex development of its resource in the Surat Basin, in south-western Queensland, may well be an important factor in averting a supply shortage which market watchers believe could hit East Coast gas as early as next year.

The news followed important domestic announcements by Santos and APA about their commitment to developing the important natural gas resource in the Pilliga, in north-western New South Wales, and to build a pipeline to enable the gas to be sent to manufacturing and energy distribution companies to the south.

The Pilliga project is of enormous importance to NSW. The Australian Financial Review this week estimated full production and pipeline construction costs as a $2.5 billion investment in NSW.

If approved, the project will deliver thousands of jobs and a supply of gas which could be as large as 50% of the State’s needs for the next 20 years.

The Pilliga proposal has been identified by the NSW Government as a development-suitable project, but the safety and environmental risk mitigation aspects of the proposal will now be studied by Commonwealth and State authorities before production approval is granted.

As well, the project will have to withstand the likely opposition it will get from anti-gas activists, including elected officials such as NSW Greens MP Jeremy Buckingham.

Without having laid eyes on the 5000 page Environmental Impact Statement lodged by Santos this week, Mr Buckingham declared war.

The EIS “would reignite the war over coal seam gas in NSW” he said, challenging the new NSW Premier, Gladys Berejiklian,  to stop the “development of a toxic coal seam gas industry in NSW”.

Unfortunately, this is likely to be the level of ‘sensible’ engagement about the merits of the Pilliga project and the EIS statements for the resource project and pipeline.   Activists even went so far as to launch court proceedings to try to stop a water treatment plant being built by Santos for the environmental benefit of the project, local soil irrigation and desalination programs and for possible use by farmers if commercial gas production proceeds.

In challenging the Premier to stop the development of a coal-seam gas industry in NSW, Mr Buckingham deliberately and disingenuously overlooks the AGL coal-seam gas operation which has operated safely and successfully on Sydney’s southern outskirts for the past 15 years.

The project, at Camden, is located near Sydney’s primary drinking water storage, the Warragamba dam.  When the dam sluice gates are opened, a number of the Camden gas wells are literally underwater.  This happens regularly – and constant water and air sampling in the area shows this has never caused a problem for the water or the air.

Yet NSW activists claim, with passionate conviction, that coal-seam gas extraction can not take place without poisoning water and polluting air.

The same claims are made in Queensland, yet gas has been extracted from coal beds there for 100 years without calamitous consequence.

The world-leading CSG to liquid gas (LNG) export industry has been operating successfully in Queensland now for a decade – again without the activist-predicted calamity.  Prominent anti-gas campaigner Dane Pratzky (aka the Frackman) even went so far as to say the industry would bring about the “end of the world”.

In addition to being an outstanding addition to the Queensland and national economies, that CSG-LNG industry is Australia’s most potent contribution to reducing global greenhouse gas emissions.  This is because the LNG is being used by power generators in Asia in place of coal-fired electricity, achieving emissions reductions of about 50%.

This is a major contribution to energy use and emissions reductions on a scale way bigger than Australia’s.  Blocking Australia’s utilisation of natural gas will only hinder that coal-substitution – an environmental benefit which has been well exhibited in the USA in the past decade, where shale gas has been the biggest factor in carbon emission reductions lauded by the Obama administration and the global community.

Environmental issues aside, the East Coast gas market is crying out for development of the Pilliga project.  Gas users, the industry and the ACCC have all identified the urgent need for new sources of supply. Hundreds of thousands of jobs and tens of thousands of East Coast businesses  depend  on a sure supply of natural gas.

Fertiliser, glass, chemicals and plastics manufacturers simply can not do without it.  Natural gas is not just an energy source for industry and small business, but an actual feedstock for many products.

While anti-fossil fuels protesters cry ‘keep it in the ground’, they simultaneously seek donations for petrol money.

The people of NSW and Australia deserve a more sensible discussion; and the place to start is the Pilliga natural gas project.

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