Monday, 25 August 2014

Coal seam gas industry's peak body APPEA refuses to reveal to Baird Government how much gas it estimates members will to be able to deliver to the domestic market in NSW

The NSW Parliament’s General Purpose Standing Committee No. 5 on 20 August 2014 has revealed that the Baird Government has no idea if supporting the coal seam gas industry in this state will actually produce affordable gas for the domestic wholesale/retail market.

In response to a question from the Hon. Rick Colless: I am sure you are aware of the Gladstone LNG terminal development. What impact will that development have on gas prices for New South Wales customers?

The NSW Minister for Resources and Energy Anthony Roberts answered in part:

The development of Gladstone will fundamentally change the east coast gas market. All the gas that we had previously available to us in New South Wales will now also be available for export.
It has been predicted that prices could as much triple once the export hub is fully operational…..
However, it is regrettable that the east coast gas market is also faced by issues of transparency. I am not aware of any public policymaker in Australia who has a detailed understanding of how much gas is being contracted to overseas customers. I am not aware of any public policymaker that knows whether the east coast gas market has the ability to deliver this without causing domestic shortfalls. I am not aware of any public policymaker that knows what penalty provisions apply should the exporters fail to deliver on their promises.
It concerns me greatly that the parties to these joint ventures may have overcommitted themselves believing domestic supply may have come on faster than it has and in greater quantities. Frankly, I find this a completely unacceptable situation. …..
as I have stated many times before, if you cannot measure you cannot manage. We cannot continue to tolerate a situation where Australian policymakers are being, quite frankly, left in the dark.
I understand that individual players in the industry may have commercial-in-confidence arrangements that they do not wish to be made public. However, I have repeatedly asked the Australian Petroleum Production and Exploration Association to work to aggregate this information so that it can be presented to government and the public. To my great disappointment, they have continually refused to do so. For this industry to gain a social licence in New South Wales it is vital for it to be transparent and to demonstrate how the development of this industry will benefit the State of New South Wales.
I feel this sentiment was captured well by the Premier of Western Australia, Colin Barnett, who, reflecting upon the gas situation on the east coast, stated:
It's a hard narrative to sell to the community, to a government that we are going to increase production of gas and we
are going to export and, in the meantime, domestic supplies might be diminished and domestic prices will go up.
Further to that he stated:
I am a politician and I am pretty good at selling a story but I would find that a tough one to sell.

Instead of enthusiastically supporting this industry it might be wise for the NSW Government to adopt a precautionary approach and assume that if the gas industry refuses to share information then the likely cause is that it is attempting to conceal the fact that it has been consistently telling untruths to governments ministers, departmental heads, members of parliament and local government councillors for many years.

Even Metgasco Limited, which tries to make much of its alleged plan to supply gas to local businesses in the Casino district of northern NSW, cannot disguise the fact that high on its wish list is enough money to finance the Lions Way Pipeline (LWP) which would send gas from any future wells up to the export hubs in Queensland and not into other parts of New South Wales:

Metgasco’s independently assessed 2P and 3P reserves well exceed local (Northern Rivers) gas demand.   As such it plans to supply gas to the eastern Australian and international gas market.   We have considered a number of different alternatives to supply its gas to these markets.   At present the most attractive and preferred option is to build a pipeline from the Casino / Kyogle area to tie in to the existing Roma –Brisbane pipeline in Queensland.
The majority of the work required for an environmental approval has been completed on both sides of the NSW / Queensland border.  The main outstanding work is the cultural heritage studies.  When project planning commenced, it was envisaged that this project would be assessed under the NSW Part 3A process.  Metgasco has agreed with the NSW government to transition the project to the new SSD process, with approval work already completed under Part 3A able to be used in SSD.
The pipeline is approximately 150 km in length and is expected to have diameter of 450mm.  It will be buried for its entire length, typically to depths of 900mm - 1,500mm.  It is estimated to cost in the order of $145 million....
Metgasco will recommence activity on the LWP when it decides to restart other field activities in the Clarence Moreton Basin.

The Sydney Morning Herald 28 September 2010:

NEW South Wales-based gas company Metgasco will assess an ambitious bid to partner with LNG Ltd and transport its coal seam gas more than 500 kilometres to Gladstone where LNG Ltd is planning to construct a liquefied natural gas plant for export.
The companies have signed a memorandum of understanding and will jointly fund a feasibility study into the plan. Under the plan, gas from Metgasco's Clarence Moreton Basin in northern NSW would be piped to Fisherman's Landing in Gladstone. The possibility of developing the LNG plant in the Port of Brisbane is also being considered.
Metgasco says if the project is judged to be economic the company could select a preferred LNG option next year. One of those options is a floating LNG platform. Metgasco says it has also signed a separate memorandum of understanding with Norwegian-listed FLEX LNG to evaluate building the project offshore. Metgasco's 2239 petajoules of proved, probable and possible gas reserves are located on the coast, unlike many other coal seam gas projects, making the option a consideration. It says its resources could supply an LNG plant up to 3 million tonnes a year of gas over 20 years.
Metgasco managing director David Johnson said the company was well advanced in developing the Lions Way gas pipeline, which will transport gas from northern NSW to south-east Queensland.

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