Economic & Industrial

Morrison unveils gas plans

Morrison unveils gas plans
Mining News Pro - The federal government has announced plans to re-set the east coast gas market and create a more competitive and transparent gas hub by unlocking gas supply, delivering an efficient pipeline and transportation market, and empowering gas customers.

Prime Minister Scott Morrison on Tuesday announced plans to get more gas into the east coast market by setting new gas supply targets with states and territories and enforcing potential “use-it or lose it” requirements on gas licences, and unlocking five key gas basins starting with the Beetaloo basin in the Northern Territory and the North Bowen and Galilee basin in Queensland, at a cost of A$28.3-million.

Furthermore, the government would move to avoid any supply shortfall in the gas market with new agreements with the three east coast liquefied natural gas (LNG) exporters that would also strengthen price commitments.

Additionally, the government would also support the Commonwealth Scientific and Industrial Research Organisation’s (CSIRO’s) Gas Industry Social and Environmental Research Alliance with A$13.7-million, and would explore options for a prospective gas reservation scheme to ensure Australian gas users get the energy they need at a reasonable price.

To boost the gas transport network, the federal government would also identify priority pipeline and critical infrastructure as part of a National Gas Infrastructure Plan worth A$10.9-million, and would reform the regulations on pipeline infrastructure to promote competition and transparency, while also improving pipeline access and competition by kick-starting work on a secondary pipeline capacity market.

Morrison said on Tuesday that the government wanted the private sector to step-up and make timely investments in the gas market, saying that if the private sector failed to act, the government would step in, as it has done for electricity transmission, to back these nation-building projects.

This could include through streamlining approvals, underwriting projects or the establishment of a special purpose vehicle with a capped government contribution.

“To help fire our economic recovery, the next plank in our JobMaker plan is to deliver more Australian gas where it is needed at an internationally competitive price,” the Prime Minister said.

“We’ll work with industry to deliver a gas hub for Australia that will ensure households and businesses enjoy the benefits of our abundant local gas while we hold our position as one of the top global LNG exporters.

“This is about making Australia’s gas work for all Australians. Gas is a critical enabler of Australia’s economy. Our competitive advantage has always been based on affordable, reliable energy. As we turn to our economic recovery from Covid-19, affordable gas will play a central role in re-establishing the strong economy we need for jobs growth, funding government services and opportunities for all.”

Minister for Energy and Emissions Reduction Angus Taylor said reliable and affordable gas was more important now than ever.

“A gas-fired recovery will help Australia’s economy bounce back better and stronger while supporting our growing renewable capacity and delivering the reliable and affordable energy Australians deserve.

“We are building a robust and competitive gas industry that will allow both gas producers and users to thrive, with lower prices and lower emissions benefiting all Australians.”

Minister for Resources, Water and Northern Australia Keith Pitt said the government’s Gas Plan would drive job creation and economic growth in northern and regional Australia.

“This commitment will encourage investment to unlock Australia’s vast resources potential – boosting exports, jobs and energy supplies.

“Developing Australia’s untapped gas resources will help to deliver more affordable and more sustainable gas supply that supports households and businesses.”

The Australian Petroleum Production and Exploration Association (Appea) said that the announcement was a "good first step" to reinvigorate Australia’s oil and gas industry, which will be important to help power Australia’s economic recovery.

“Reliable and competitively priced energy is crucial to the health of our nation’s economy. While the average wholesale gas price in Australia last year was around 40% less than the average wholesale price for the Asia Pacific region, more can be done to lower the retail price paid by consumers and businesses,” said Appea CEO Andrew McConville.

“Appea and its members will work with the government as it looks to extend the Heads of Agreement with the three east coast LNG producers. The government’s plan recognises there is no silver bullet to driving down gas prices and that several steps need to be taken.”

McConville said that exploration and development of the basins identified were critical to the enduring supply challenge Australia faces.

“Without exploration, there is no gas. Encouraging exploration activities by extending the Junior Minerals Exploration Incentive (JMEI) and allowing junior oil and gas explorers to access the scheme would help fast-track the exploration work that needs to be done in firming up these resources.

“This needs to be matched with improving the investment attractiveness of Australia to ensure we get scarce global capital so this can happen, and we welcome the government’s commitment to work with individual states and territories to improve the regulatory and investment environment.”

The Queensland Resources Council has also welcomed the investment, with CEO Ian Macfarlane saying more gas pipeline infrastructure is a key response to the Covid-19 recovery.

“Gas pipelines can help to redress the tyranny of distance by connecting gas fields to domestic customers.

“A new trunk line to aggregate gas collection will help increase the supply of gas across a whole province and lower the cost of delivering gas to customers,” Macfarlane added.

Gas supports the manufacturing sector, which employs over 850 000 Australians and is an essential input in the production of plastics and fertiliser. In 2019, Australia was the largest exporter of LNG, with an export value of A$49-billion.

Australia’s oil and gas industry has invested more than A$350-billion in oil and gas supply infrastructure development over the past decade, has contributed to government revenue through the payment of A$71.6-billion in tax payments and levies, and directly supports 80 000 jobs.

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