Conversation between NSW Minister for Industry, Resources and Energy Anthony Roberts & Australian Minister for the Environment and Energy Josh Frydenberg at COAG Energy Meeting, August 2016*
The federal and state governments on the east coast of Australia stood quietly by as APPEA and the gas industry structured export and domestic contracts in such a way as to businesses and families pay increasing high gas bills in order to subsidise the industry’s export markets.
Now the Baird Government decides that the best way to deal with this is to let the gas industry expand its exploration activities once again - creating new gas fields across the state.
Gas fields which will still produce gas for sale under the very same commercial arrangements which see Australian domestic gas prices so much higher than the price paid by international buyers.
That is unless the Turnbull, Baird, Palaszczuk and Andrews governments insist that the wholesale domestic gas price is no longer tied to the export price and state domestic gas reserves are established so that supply adequately keeps pace with demand.
The Australian, 22 August 2016:
New frontlines in the battle among environmentalists, pastoralists and gas explorers are set to be drawn, with governments in NSW and Victoria weighing up moves to reopen the door to critical energy projects to avert a looming price crisis.
The Baird government is preparing to stare down fierce environmental opposition to coal-seam gas mining by lifting a moratorium blanketing most of NSW and approving projects on a “case by case” basis.
The move, which will reignite a debate largely extinguished after the buyback of earlier mining licences, comes as Victoria is expected by the end of the month to decide on the future of its longstanding moratorium on all new gas projects.
NSW Energy Minister Anthony Roberts said it was a priority to keep supply stable and reliable as the market transitioned to renewable energy.
“Gas is also an important feedstock for a number of manufacturing processes, not just a fuel source, and therefore ensuring continued reliable and affordable supply underpins employment and investment in a number of key sectors and locations,” Mr Roberts told The Australian……
Narrabri farmer Alistair Donaldson is adamant the development of coal-seam gas close to his beef and grain property would create economic and environmental problems.
“As landholders, we are held to ransom for what is essentially a highly invasive and potentially destructive industry,” Mr Donaldson said.
“They’ll spruik the economic benefits of the mine, but at the end of the day it comes at the expense of other industries without even considering the environmental issues, which are monumental.”
NSW has significant reserves of coal-seam gas in the Gunnedah Basin, where Santos is already working on a project near Narrabri, as well as in the northern Clarence-Moreton Basin and near Gloucester, north of Newcastle.
Mr Donaldson said gas supply had not been an issue until the development of an export industry focused around Gladstone in Queensland.
“They will take up all available gas no matter what, and I can see us having domestic gas issues for the foreseeable future no matter how many fields we open up in this state … that really frustrates me,” he said.
Anti-mining group Lock the Gate is already threatening to campaign against any easing of restrictions, and is calling for a complete ban in the state.
“If the NSW government opens up the countryside again to unconventional gas and fracking, they know very well that it will be met with widespread community protest and resistance,” said Georgina Woods, Lock the Gate’s state co-ordinator.
“Better to make sensible laws that match the public’s expectations and protect farmland and water than cave in to gas industry pressure and face a popular backlash.”
The Baird government paid $25 million to buy back three exploration licenses from Metgasco late last year after the Supreme Court had found that licences granted by the previous Labor government had been improperly suspended. The move to a case-by-case assessment of gas projects in NSW was recommended by the Australian Competition & Consumer Commission and endorsed by last week’s meeting of federal and state energy ministers.
NSW allows coal-seam gas projects in a small slice of the state focused on Narrabri, where Santos is hoping to develop a mine.
The development of that project could supply between one-quarter and one-half of the state’s gas needs, according to the Australian Petroleum Production & Exploration Association.
A Santos spokesman said the company was finalising environmental assessments for the Narrabri gas project, which it would submit to the government shortly.
Any change is likely to mean the government will make stringent assessments of the social, environmental and economic impact of potential projects and allow those that are deemed appropriate to be put to tender.
A more detailed strategy is expected to be released by Mr Roberts later this year…..
Australian Minister for the Environment and Energy Josh Frydenberg, media release, 19 August 2016:
COAG ENERGY MINISTERS AGREE TO SIGNIFICANT REFORM PACKAGE
The COAG Energy Council has agreed to significant reforms and a major new program of work to ensure the energy system remains affordable and reliable as we transition to a lower emissions future. Council focused on three key areas of reform: · Increasing liquidity and transparency in gas markets
· Empowering consumer choice
· Ensuring stability and connectivity of the National Electricity Market (NEM)
Significant reports on gas market reform from the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Commission (AEMC) provided a strong evidence base and momentum for action. To fast track implementation of the recommendations from these reports Council will form a new Gas Market Reform Group headed by Dr Michael Vertigan.
These are the most significant reforms to the domestic gas market in two decades. Council recognised the growing importance of gas as a transition fuel as we move to incorporate more renewables into the system.
The reforms will improve competition, encourage more supply and put downward pressure on prices. Another key focus of the Council will ensure consumers can confidently take advantage of new technologies such as battery storage through the introduction of appropriate consumer protections.
Council acknowledged the important role played by interconnectors in the NEM and agreed to review regulatory settings to ensure they do not present barriers to appropriate investment in the current market environment.
Officials have also been asked to provide advice on economic and operational impacts of existing and proposed state and territory emissions reduction policies on the energy system.
This advice will inform the Council’s consideration of how to better integrate energy and emissions policy.
The Council has proved its ability to respond to current issues and I look forward to further engagement with my colleagues when we meet again in December to build on the progress made today.
Ends
* ROBERTS: “We’ll just back you…..people aren’t going to love us, they’re going to hate us….”
FRYDENBERG: “Well I won’t say that in front of the T.V….”{laughing}
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