Less gas equals less jobs – Koutsantonis

February 3rd, 2017

South Australian Treasurer Tom Koutsantonis nailed it when he said this week:  “Less gas equals less jobs.”

Mr Koutsantonis should know.  SA has been a the national leader of safe, efficient development of natural gas resources for decades and his State has been a big winner economically as a result.

He also knows that the partial shutdown of gas power generation in SA was a key element in exposing the State to the nation’s first ever Statewide blackout.

So SA is a leader in natural gas development and a leader in deployment of renewable energy.  However it is largely an ‘exporter’ of gas (most goes to the East Coast) and this has left it caught short when the wind is not blowing and the sun is not shining.

Companies like Santos, Beach, Senex and Cooper are still working to get the best out of their commitments to natural gas from SA’s Cooper Basin.  But the days of big new investment projects rolling one after the other appear numbered.  The resource is getting harder to tap. New jobs and new ‘exports’ will continue in the years ahead, but not in the rapidfire style of the past.

It has now been well documented and accepted that the East Coast is on the brink of a gas crunch which will put thousands of jobs at risk in manufacturing in Victoria and NSW – and push energy prices up for millions of small businesses and consumers.

SA’s Cooper Basin is no longer the solution; nor are the Bass Strait fields which have delivered ridiculously cheap gas for decades.  They are dwindling, with extraction becoming harder and more expensive.

As the ACCC, industry, Federal Government and others have told us repeatedly, new sources of natural gas need to be found and tapped.

As the Government has found this week, not everyone in the business world is convinced that cleaner coal technologies will provide the answer to our growing energy price and reliability problem.

The reason?  There is too much political risk to make the enormous leap into investing the billions of dollars which would be necessary.  Commonwealth and State legislation, regulation and highly politically-focussed Green-vote policies are causing understandable investment aversion in coal power.

That is why this week’s announcements of investments in potential development of new gas and associated pipeline infrastructure in northern NSW are so welcome and so important – to the State and the nation.

On current political settings, and geological understanding, the Pilliga proposal by Santos is the only feasible major natural gas project available to be developed south of the Queensland border.   Less than 10% of NSW is accessible (the rest has been locked out), Victoria has a total ban and Tasmania has a fracking ban.  And the South Australian Opposition has a policy to close down exploration in the State’s South-East, where natural gas extraction has a safe, positive history.

If it is given the environmental green light, the Pilliga project and pipeline will deliver thousands of jobs and investment of as much as $2,5 billion, according to the Australian Financial Review.

It could produce enough gas to provide half of the needs of NSW manufacturing, agribusiness and consumer heating and hot water for 20 years.

This is at a time when the State’s only existing producer, AGL, is coming to the end of the line with its Camden natural gas project, which has safely delivered the goods on Sydney’s southern outskirts for 15 years.

Anti-fossil fuel activists will do their best to thwart the Piliiga project, saying, incredulously, that the State does not need any more gas.

If the International Energy Agency is any judge, the activists are very wrong.

In its 2016 outlook, the IEA says the risks to energy security mean gas will play a central role – with demand rising as much as 50% in the period to 2040.

Renewable energy will grow at pace, but with that come inherent challenges in electricity grid management – as South Australians have found and the Commonwealth is now keenly aware.

Energy security risks will rise and natural gas will emerge with an increasing profile  as the “indispensable”  complement to intermittent wind and solar energy, the IEA says.

Importantly, the IEA Outlook takes into account the national pledges on carbon emissions made in this year’s Paris Agreement on climate change.

Time to dispense the activist myth that everything will be peachy in a 100% renewables world and that we can do without projects like that proposed in the Pilliga.

 

AFR Digital Editions, Friday, February 03, 2017 - AFR Digital Editions

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