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Industry and Government must work together to solve gas crisis

22 November 2019

Frank Tudor, Jemena MD

 

This country’s second largest export, natural gas, is expected to bring approximately $282 billion to the Australian economy this year. The sector underpins around 80,000 jobs and provides a critical fuel-stock for Australian industries which rely on gas to power their operations.

 

A simple back of the envelope analysis suggests that our gas industry is one worth supporting. However, to do this we need to tackle the challenges presented by declining supplies across the east coast.

 

This week’s COAG Energy Council meeting provides an opportunity for governments to rebalance the gas supply vs. demand equation, while also helping to lower east coast gas prices for customers.

 

To do this COAG Ministers should take advantage of an industry which is ready, willing, and able to develop Australia’s vast gas reserves as well as the infrastructure which is required to bring that gas to where it is most needed.

 

As a prerequisite though, industry and gas consumers need a regulatory environment which encourages investment in new gas supply and transportation infrastructure at an expedited timescale.

When tackling this challenge, great precedent already exists, particularly from those jurisdictions in our country’s north: Queensland and the Northern Territory.

 

In the case of the sunshine state, collective action from government and industry has fostered the development of a vibrant gas sector which contributed around $55 billion to Queensland’s economy between 2011-2018, supported around 4,600 full-time jobs, and saw around $50 billion spent on goods and services from the local community.

 

Queensland’s approach to gas development also has clear benefits for domestic gas customers.  

 

Late last year the Queensland Government ear-marked significant gas acreage in the state’s south west for the domestic market. At the same time, it set industry a challenge to develop that acreage and the infrastructure that is needed to transport this gas by the end of 2019.

 

Jemena was keen to support this project, and together with our project partner, Senex Energy, are on-track to meet this challenge head on – less than 18-months from start to finish. The resultant additional gas will be used by local industry, supporting local jobs – particularly in remote parts of the country.

 

This model of industry and government collaboration should be replicated as we look to develop other significant gas reserves in the top-end, particularly the Northern Territory’s Beetaloo Basin.

 

Here much work has already happened, with the Territory Government working with industry to develop the Northern Gas Pipeline. This project, which came online early this year, is helping to underpin industry and jobs in Queensland’s Mount Isa region where the pipeline ends.

 

What these examples show us is that through coordinated action additional gas can be brought to market quickly.

 

At the same time, we know that natural gas has a very real role to play as the country transitions towards a low-carbon future. Only gas can provide sufficient firming power which is needed in a power system accented by intermittent renewable technologies that are reliant on weather conditions beyond our control.

 

International experience demonstrates this to be the case.

 

From 2009, the United States invested heavily in its onshore oil and gas industry, driving it from being a gas importer to one of the world’s largest exporters. Over the same time period, the domestic price of gas in the US dropped by over $10/GJ (USD), and is forecast to remain at less than $3/GJ (USD) for the next two decades.

At the same time, this also helped the United States to effectively retire some 80GW of coal-fired generation – nearly double Australia’s entire generation capacity – which was then replaced by the natural twins of renewable energy and gas-fired generation.

 

With less than half the carbon intensity of coal and other fossil fuels, gas not only provides flexible, affordable, and reliable energy, it also has a very real role to play towards meeting our country’s carbon emissions targets. New and emerging technologies, including biogas and hydrogen, which are expected to come online over the forthcoming years, are also demonstrating how gas can be a net-zero carbon emitter, while continuing to shore up the reliability of the energy grid. 

 

In Australia, we are fortunate that we are endowed with significant energy resources. We also have a number of operators and investors in gas production and transportation assets that stand ready to work with all stakeholders to unleash the economic potential of our country’s vast natural gas resources.

 

In order to bring down gas prices and protect the future of Australian manufacturing we must take steps now to rebalance the supply vs. demand equation in an environment that supports investment and the development of our natural energy advantage.

 

I encourage leaders at this week’s COAG meeting to work towards this goal.

 

Frank Tudor

 

Managing Director,
Jemena