AGL warns NSW winter gas supply not guaranteed

THE New South Wales Government is scrambling to bolster energy sources after claims the state could face three weeks without guaranteed gas supply in winter next year.

A parliamentary inquiry into the supply and cost of gas in NSW kicks off today with dozens of submissions coming from miners, farmers, businesses and activist groups.

The State Government report vowed to reverse the current supply chain in which 95% of gas used in NSW is sourced from outside the state borders.

It said all current proposed major gas projects in NSW (Narrabri, Gloucester and Camden projects) had committed to providing gas produced to the state's own industrial and household domestic consumers.

"These projects could supply up to 80% of our gas demand," it stated.

NSW gas demand by customer segment chart. Photo Contributed
NSW gas demand by customer segment chart. Photo Contributed Contributed

The government has also entered into a memorandum of understanding with the Northern Territory to examine possibilities of developing a gas pipeline between the state's gas reserves and NSW's coast.

"The government will also investigate opportunities to increase pipeline capacity from Victoria and South Australia to help alleviate supply issues faced by NSW," the submission stated.

Earlier this month, gas company AGL warned NSW could face 21 days of gas shortages in winter next year unless restrictions on coal seam gas developments were lifted.

The same claims were made in its submission totoday's hearing, with places like Greater Western Sydney, the Central Coast and regional areas including Newcastle and Bathurst predicted to be most at risk.

The company said allowing its Gloucester gas project to be developed, which could supply 15% of the state's gas needs, would increase the net value of NSW's gross domestic product to 2035 by $968 million and reduce wholesale gas prices in Sydney by 8% in 2025.

Lock the Gate Alliance campaign co-ordinator Carmel Flint will be the first speaker at today's hearing.

In her submission, she argued mining additional gas in NSW would have little impact on prices because the eastern Australian market is focused on export and is dominated by inflated Asian prices.

"Instead of pursuing such a zero-sum game, the NSW Government should be identifying opportunities to reduce the dependence of NSW households and businesses on gas, and hence reduce their vulnerability to the gas price shock," she wrote.

"CSG exports mean that all gas mined in eastern Australia, whether it is exported or used domestically, are part of the same market and linked to Asian prices.

"No amount of CSG mining in NSW will change this."

A second public hearing will be held on Tuesday, before a final committee report is filed on February 25. 


Australia Insistute discredits gas cupply 'cliff' claims

INDEPENDENT public policy think tank the Australia Institute has discredited AGL's claim NSW is heading for a gas supply "cliff", where there will not be enough gas to power the state.

In its submission to today's hearing, authors Matt Grudnoff, Mark Ogge and Rod Campbell said NSW faced a gas price shock, not a shortage.

"Mining more gas in NSW or elsewhere will have very little effect if any on the gas price, as any additional gas mined will still be linked to global gas prices," they argued.

"It could potentially raise gas prices in NSW further by requiring further otherwise unnecessary investment in gas network infrastructure."

The think tank said implementing a gas reserve policy and export restrictions, while "extremely difficult to implement politically", were the best options available.


Company pushes for drilling restrictions lift

MINING company Metgasco has used the inquiry into gas supply and prices to again push for the government to lift restrictions causing its drilling operations around Casino in northern NSW to be put on ice.

Managing director Peter Henderson said the NSW Government's apparent commitment to preserving the state's gas supplies flew in the face of its actions over the past four years.

He said the government's new gas policy, announced in November, threw into doubt its ongoing support for the exploration, changed the responsibilities of government departments "once again" and questioned basic land access rights and remuneration.

"We can draw no other conclusion other than that the regulatory environment will remain unstable and uncertain for some time, providing a disincentive to all gas companies to invest in NSW," he said.

"Responsible investors and qualified, competent gas companies will shun the state and take their businesses elsewhere or defer expenditure in this environment.

"For example, Metgasco recently announced a planned merger with another listed Australian company which operates in the USA.

"The USA offers a much more favourable investment climate than NSW."


Domestic reservation policy needed

NSW Farmers Association policy advisor Adair Moar told the inquiry a domestic reservation policy in co-operation with East Coast states would be the best way to safeguard the NSW gas supply.

"We do not blindly accept the assertion of a supply crisis and more importantly, we would not support a step away from the current strengthening of the scientific regulation of this industry because of such a crisis," Ms Moar wrote.

"Costs are set to rise for reasons beyond the control of the NSW regulatory authorities, and costs and supply uncertainty could be affected by the development of a reservation policy extending far beyond the ambit of the NSW Government's exclusive regulation and control."

The view was echoed by the Australian Workers Union, which has launched its Reserve Our Gas campaign to keep a portion of the gas produced in the country within its borders.

It said the impending price increase could result in 235,000 manufacturing job losses, with one in five heavy manufacturing sites closing down.

"Despite an era of gas abundance and increased production, Australia is set to enter a period of scarcity and price escalation," it stated.

The AWU estimated the annual household gas bill would jump $262, or 26% over the next four years, from the current average of $997 to $1,259.

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