a new industry is born - part 2

From this morning's The Australian, p7. One piece of legislation, and with the stroke of a pen, a show of hands, EVERYTHING changes for a whole industry...

"Australia will need to build two new power stations the size of Origin Energy's Mortlake power station in south Queensland just to keep pace with the demand for power - before even starting to replace power stations that are shut down."

"The Australian Energy Market Operator estimates the nation needs and extra 700 to 900 megawatts of power annually, just to accommodate rising energy demand."

So, this is before ANY of the current coal-fired power is replaced with gas. That is just the rising demand!

Then consider that once the carbon tax is passed, a whole raft of new gas-fired power stations will be looking to make an FID, secure the scarce unallocated gas reserves, begin construction, to begin the transition to entirely replacing coal-fired power. And investment decisions about taking over unallocated gas reserves will be made also. And this process will continue until, in time, all coal-fired power is replaced.

So, when you have a look at the gas 2P reserve positions of Santos and Origin, consider this. Subtract the gas that they need to export - that will be going offshore.

- How much 2P reserves do they have left, to service the complete structural change that is about to engulf the energy sector?

- From where are the gas reserves going to come, not just to service the rising energy demand that exists anyway, but to completely replace the existing coal-fired power generation?

- And particularly in NSW, from where will the gas come for all the new gas-fired power stations? Who controls it?

And the thing is that, once these large resources are taken over, they are tied up in the hands of the new owners. That is it. Anyone who does not control the gas at source becomes a price taker.

This is a resource "people will die fighting for". It is that strategically important. Two major industries (one already booming and the other about to boom), and scarce unallocated reserves, with ESG being the biggest...

Yaq