Gas supply problem is yours to solve, states told

December 13th, 2014

While the nation’s Energy Ministers were meeting in Adelaide last week, a Sydney function was being given some sobering advice from well informed figures, economist and former federal minister Craig Emerson and Santos senior executive James Baulderstone.

The pair told an industry gathering there was little likelihood of any policy agreement breakthrough at the Ministerial Council.  They were right – the Council took no action, despite the acknowledgement of the importance of the issue:

The transformation occurring in Australian gas markets presents unheralded economic opportunities for the Australian economy and timely reforms will ensure these opportunities are maximized for the good of all Australians,” the Council communique says, without indicating the nature of those reforms or whose responsibility it will be to implement them.

But given natural gas development is rolling ahead quickly in Western Australia, the Northern Territory, Queensland and South Australia, it doesn’t take much to work out the answer.

What the policy inertia means in the marketplace was explained succinctly by Baulderstone:  millions of consumers and thousands of gas-dependent small and large businesses face rising prices and an energy crisis in about three years.  Given it takes 3-4 years to develop a gas field, we are looking down the barrel of this outcome now — and the situation gets potentially worse day by day.

Restrictions on development in NSW and the moratorium in Victoria mean the 5.5 million gas users in southern Australia face the prospect of their previously reliable supply from Bass Strait and South Australia being drawn away to export markets to the north, while abundant reserves lie in a policy lock-up in the ground beneath their feet.

According to unions and Manufacturing Australia, if the new Government in Victoria does not clear the way for responsible development of natural gas resources, businesses will be forced closed, more manufacturing  will move offshore and tens of thousands of jobs will be lost, possibly more.

Reserving existing supplies for domestic consumption was an idea put on the table at Adelaide meeting, but as predicted by Dr Emerson, this suggestion was rejected by a Ministerial Council undoubtedly cognisant of the legal and economic impracticalities of trying to impose such a constraint on individual States and producers.

It is also redundant as onshore gas producers have already made clear their intention to meet domestic demand, should they be allowed to actually draw new reserves from the ground – despite the scaremongering campaigns run by anti-industry activists.

While this picture was alarming, there is room for mid-term optimism, assuming Governments did move forward on resource development.

In the US, the shale oil and gas phenomenon had rejuvenated flagging manufacturing activity and restored growth to many parts of the country which had been sliding badly.  A similar thing occurred in southern Queensland as it embraced development of coal-seam gas for domestic consumption and export as liquefied natural gas.

Craig Emerson summed up well when he said:

“The same thing could happen in the Pilliga, where I am from. We just need to recognise that this country has been built on resource development, listen to and address the concerns of those opposed to development, and then get on with it.”  

+ Leave a Comment

We encourage you to join the conversation. By commenting on this post, you agree to our comment guidelines.