Macfarlane Warns of Severe Gas Shortage in NSW

Friday, September 12th, 2014
liked this article
Autodesk – 300 X 250 (expire December 31)
coal seam gas
FavoriteLoadingsave article

The federal Industry Minister has called for the increased exploitation of coal seam deposits and the construction of pipelines from the Northern Territory to NSW to curtail future gas shortages.

Industry Minister Ian Macfarlane has warned that NSW could be plagued by major gas shortages in just several years time due to insufficient progress in the development of Australia’s domestic reserves, leading to sharp gains in electricity costs.

Speaking at a business lunch recently, Macfarlane said opposition to the development of Australia’s coal sesame reserves could lead to NSW being “very short of gas in three to four years.”

“We continue to face what is becoming an unsolvable problem,” Macfarlane said with respect to local opposition to CSG development.

His warning comes just after consumers in NSW were hit with a mid-year hike in gas prices of 20 per cent. Victoria is set to experience similar steep gains, which will be even more vexing for residents of the state given that they use much more gas than other Australians for their cooking and home heating needs.

The Minister was quoted in The Australian on Tuesday as calling for the eastern Australian gas market to be “flooded with gas” to bring these prices down, either through the exploitation of coal seam gas wells in NSW or the construction of a pipeline linking gas fields situated in the north of Australia to the country’s south-east.

Macfarlane considers the construction of a pipeline to the Northern Territory in tandem with long-term supply contracts to be a viable solution for the dilemma of rising gas prices.

Critics point out, however, that the chief factor behind steep gain in gas prices is the prospect of exporting Australian LNG to overseas markets with heightened levels of demand.

Analysts expect wholesale gas prices to cross the $10/gigajoule threshold once domestic LNG is sent abroad via huge terminals in Queensland, compelling local consumers to compete for domestic supply with international buyers.

The renewable energy industry has slammed Macfarlane’s call for further development of the domestic gas industry to bring down prices, given that the Coalition’s plans to revoke or weaken the renewable energy target (RET) will likely lead to a rise in rates for electricity produced by coal and gas-fired generators.

The recent Warburton review found that any weakening of RET would slow the installation of renewable energy facilities, lifting prices for energy generated by means of conventional fossil fuels.

FavoriteLoadingsave article


 characters available
*Please refer to our comment policy before submitting