Queensland Premier Anastasia Palaszczuk declared this week that Australia’s East Coast needs to produce more gas – and then backed up her words with an announcement of expanded exploration opportunities.
Ms Palaszczuk also threw down the gauntlet to the Commonwealth and neighbouring States, saying more pipeline investment was needed to transport much-needed gas to southern States.
She was speaking after a trip to the USA, which had shown her the enormous benefits of developing onshore natural gas resources and supporting infrastructure
Queensland is currently carrying the can for the southern States, particularly the manufacturing States of NSW and Victoria where gas is critical to production in some industries and an important element of the cost of energy in others, including small business.
East Coast supply of natural gas is tight because in the past 15 years there has been virtually no development of new onshore gas sources. With a growing population demand has increased, while long-standing supply sources from Bass Strait and the Cooper Basin (South Australia) are dwindling and becoming more expensive to extract.
In these circumstances, the result is uncertainty about supply and upward pressure on wholesale prices.
Increased activity by gas producers in the Cooper Basin has helped ease the pressure, but Queensland has done most to restore confidence in domestic supply and push prices down, both of which have happened in the past six months, as we have noted here and here.
Now it is time for other States to contribute, according to the Queensland Resources Minister, Andrew Lynham.
Dr Lynham told a national gas conference in Sydney this week that NSW and Victoria were failing to pull their weight.
Dr Lynham told the Australian Domestic gas Outlook conference that it was not reasonable for other States to issue moratoriums on extracting their own gas when they are happy to import it from Queensland.
“I see no reason why other mainland states cannot follow our lead to help secure a sustainable gas industry, including a stable domestic supply.”
He announced the release of new acreage for exploration, as well as awarding two contracts for resource development.
Two domestic producers – Central Petroleum and Armour Energy – will start exploring for more gas to feed East Coast demand after winning the Government tenders for ‘domestic only’ supply.
“These tenements will give junior and mid-tier producers a further gateway into Queensland’s diverse exploration industry and….continue to help in meeting East Coast gas supply,” Dr Lynham said.
His statement followed a major announcement by domestic and export producer Santos earlier in the week, highlighting a significant $900 million investment in Queensland.