New $2 billion energy deal will require huge extra volume of gas

Santos’ Narrabri project in Pilliga Forest could provide the massive extra gas required for a $2 billion energy deal proposed by the federal and NSW governments.

In a joint announcement on Friday, the NSW Premier Gladys Berejiklian and Prime Minister Scott Morrison explained a plan to free up huge amounts of gas for domestic power generation.

The $2 billion deal between NSW and the Commonwealth to boost gas supply will commit both governments to invest in clean technology and energy efficiency, the Prime Minister said.

“There is no credible plan to lower emissions and keep electricity price s down that does not involve the greater use of gas as an important transition fuel,” Mr Morrison said.

“This plan is about getting greater access to that gas, as a vital accompaniment to our record investment in renewables.”

Industry observers say that the extra gas could come from imports via Port Kembla, but more likely through the Narrabri Gas Project – if it is approved.

The Narrabri project still awaits a decision by the Independent Planning Commission.

The Commonwealth-NSW government energy deal would require an extra 70 petajoules of gas to be fed into the east coast electricity grid each year.

NSW currently uses about 120 petajoules annually.

The extra gas is part of an energy plan to reduce emissions and promotes gas as a ‘transition to renewables’ energy source.

“Today we are announcing an agreement that we have reached between the NSW Government and the Commonwealth which is about getting electricity prices down, getting emissions down, getting more power into the system, and getting the gas to make that happen,” the Prime Minister said in his statement to the press on Friday.

“I have said this is important as a transition fuel to support our longer range future planning to ensure the health and strength of the Australian economy and make sure we meet and beat our targets we have set for emissions reduction.

“Working with the states is absolutely critical in that process and this partnership provides for that.

“The Memorandum Of Understanding we have signed is a strong step forward in meeting these priorities.

“It unlocks new gas with the NSW Government setting a target of injecting 70 petajoules a year of new gas into the market.

“The MOU sets out an ambitious technology focused plan of practical actions to reduce emissions including $2 billion of co-investment in clean technology, hydrogen research and commercialisation” Mr Morrison said.

The Premier Gladys Berejiklian said her government looked forward to meeting the arrangements for the extra gas required.

In a statement, Santos CEO Kevin Gallagher said Santos was confident in the merits of the Narrabri project.

“Santos is really proud to be part of the Narrabri community, we’re already using Narrabri gas to supply the Wilga Park Power Station which is generating enough electricity for 23,000 households here in the northwest, and we want to continue to provide jobs and business opportunities for locals, grow our business here and continue to invest in the local community,” he said.

“It would be inappropriate to pre-empt the decision of the Independent Planning Commission, which will be based on the merits of the project.

“However, we are very confident that the EIS is based on the best available science and the project will be able to stand on its merits.

“Santos welcomes the agreement between the Federal and NSW Governments to move forward with a clear pathway for both energy affordability and security, and emissions reduction,” Mr Gallagher said.

“As the Prime Minister says, there is no credible plan to do this that does not involve the greater use of natural gas to support renewables, and indeed to replace old coal-fired power plants over time.

“In NSW, all Santos needs is a decision on Narrabri.

“NSW imports more than 95 per cent of its gas from other states and as a result, NSW businesses face a big disadvantage compared to their peers in other states – a commercial baker in Sydney pays over $25,000 more for gas every year than they would in Brisbane.

“If we can develop Narrabri gas, it will be the most competitively-priced gas for NSW customers, and it will always be cheaper than LNG imports, especially when gas prices are high in Asia.

“I’m also pleased to see the focus on emissions-reduction initiatives and the Prime Minister’s technology roadmap that will include carbon capture and storage,” Mr Gallagher said.

“A mature debate about climate change and emissions reduction must address technologies to make the fuels that are the biggest part of our energy mix – oil, coal and natural gas – cleaner and eventually ‘zero emissions’.

“This is necessary for the world to have any chance of keeping global temperature increase to well below two degrees Celsius. By 2040, the International Energy Agency says Carbon Capture and Storage projects will need to be storing more than two billion tonnes per year to meet global climate aspirations – today we’re storing only 40 million tonnes a year.

“Australia has a big opportunity to be a leader in this technology and we should be accelerating its development, which is what Santos is planning to do in the Cooper Basin,” Mr Gallagher said.

‘No shortage of gas’ argues Member for Barwon

“There is no shortage of gas in Australia, there’s a shortage of common sense in Canberra when it comes to gas export policy and domestic gas reservation policy,” said Member for Barwon, Roy Butler in a statement.

“Australia exports so much gas there’s not enough at a reasonable price domestically – this hurts the hip pocket of families and businesses.

“As a country we have surpassed the rest of the world to become one of the biggest exporters of liquefied natural gas.

“The government has supported this to happen all while our energy prices in Australia have soared.

“The government needs to be putting Australia first, if we don’t we’re going to end up in a ludicrous situation where we’re extracting gas and liquefying it in Australia – using massive amounts of energy in that process, sending it overseas, and for that country to then turn around and sell it back to Australia at an increased price,” said Mr Butler.

“This does absolutely nothing to decrease energy prices for Australian consumers.”

The current government handling of gas exports has done absolutely nothing to stem the meteoric rise of energy prices for Australian consumers according to Mr Butler.

“There’s a glut of gas on the international market, prices for gas in Australia have continued to rise. This goes against the market trends, and points to total mismanagement by the government.

“I don’t know if it’s incompetence or wilful ignorance that the state and federal government have manufactured a crisis. We have substantial energy generation capacity in Australia – it’s just being managed poorly by every level of government,” said Mr Butler.

“The Narrabri Shire, and many Barwon communities rely on ground water to survive. The extraction of gas from coal seams places that very water at risk,” said Mr Butler.

“Government talks about jobs and industry, but we have not seen a well head price, nor is there any off take agreement.

“With the worst drought in living memory, we have out of touch city based politicians pushing to place the very water we rely on at risk.

“The risk may be small, but they are very real, and the consequences are enormous. We can’t put the genie back in the bottle if we compromise ground water.”

Energy deal a ‘betrayal’ says Lock the Gate group

“The ‘energy deal’ announced between NSW and federal governments looks designed to unleash coal seam gas drilling in north-west NSW, threatening drought-affected farmers and allowing Santos to drain 37 billion litres of groundwater,” Lock the Gate claims in a statement.

“Crucially, it will do little to bring down greenhouse gas emissions.

“The volume of gas mentioned in the deal is similar to the amount Santos expects to produce at its proposed water-hungry Narrabri coal seam gasfield,” Lock the Gate said.

“Mullaley farmer, Margaret Fleck, whose farm is not far from the proposed gasfield, said Santos’ project would require extensive dewatering of aquifers below the southern recharge of the Great Artesian Basin and was something drought affected farmers couldn’t afford.

“We’re just gutted by this betrayal from the Commonwealth and NSW governments,” Ms Fleck said.

“Santos has failed to get support from regional communities here for their dangerous gasfield and so the Commonwealth Government has opted instead to flat-out bribe the New South Wales government.

“Prime Minister Morrison’s Government is trying to force the Narrabri coal seam gas project onto our region even as we face off against one of the worst droughts on record and despite widespread opposition to the proposal.

“The entire premise of this deal is flawed – economists have made it clear that more expensive, high risk coal seam gas won’t do anything to bring down gas prices.”