again: warnings of nsw gas shortages

Santos warns of NSW gas shortage

By: Esmarie Swanepoel
3rd May 2012

PERTH (miningweekly.com) – New South Wales, which imports 95% of its gas from South Australia and Victoria, could potentially face a significant gas supply shortage as early as 2017, if coal seam gas (CSG) resources weren’t developed soon, oil and gas major Santos warned on Thursday.

“New South Wales enjoys abundant gas resources, but its resources need to be developed without delay,” chairperson Peter Coates said.

He noted that Santos, which bought Eastern Star Gas last year, currently had the largest natural gas position in New South Wales, and was well placed to assist in developing these resources.

“While there has been considerable public debate about CSG, particularly in that state, the fact is that CSG can be extracted and produced safely. After all, that is what we have been doing in Queensland for more than 15 years.”

Coates told shareholders at the annual general meeting that the company was investing an initial A$20-million to upgrade the Eastern Star sites, equipment and processes, which would ensure that operations in New South Wales met the industry’s leading standards and practices.

“Ultimately, it is the responsible approach to the expansion of the CSG industry that will deliver trust with communities, bring new jobs, widespread economic benefits and greater energy security for Australians,” he noted.

Coates said that given its scale and quality, Santos was confident that the Eastern Star Gas resources could deliver great value to Santos, as well as to New South Wales.

Meanwhile, Coates also cautioned on the recent calls for the reservation of some domestic gas resources exclusively for the Australian industry, saying such government intervention could prove counter-productive for both the industry and the nation.

“There are abundant natural gas resources in eastern Australia, particularly in coal seams. There is no shortage of gas. But the cost of extraction is increasing, as is the cost of processing and distribution. A gas reservation policy will do nothing to change those realities,” he noted.

He stressed that a reservation policy did not recognize the true cost of gas extraction, which could pose as an obstacle to the development of resources.

“The reality is that the development of a large-scale gas industry, driven at least initially by export opportunities, is the best path. It will ensure that Australia has sufficient gas production capacity to meet all demand, both domestic and export.”

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