a new industry about to be born

It seems that a deal on carbon has all-but been done - the Federal Greens are compromising with the Government. Tony Windsor is on board. A price of carbon is upon us. The gas-fired power sector is about to boom, as are those with the reserves to feed it.

And the second wave of consolidation in the gas sector is about to happen, "very, very soon".

That being the case, we are on the brink of the birth of a new industry - gas-fired power. Yes, there are gas-fired power stations already, due to government mandates and regional factors. But with a price on carbon there is going to be a structural change to the energy sector. All those numerous gas-fired power stations, who are approved, are just waiting on this certainty in order to proceed. And so are those looking to make aquisitions of upstream gas reserves.

Soon, it will become very clear to the market that the following questions needs to be answered:

- From where will the gas come for the new gas-fired power industry in NSW?

- Who are the companies who own unallocated gas?

- And what will happen to those energy companies who do not own their own gas at source?

As Origin said, "Origin has always focussed on the strategic question "from where will the fuel come?" to meet future energy needs..."

The value of these companies, and the value per GJ of gas, is about to go up.

There is already a shortage between the gas ambitions of the QLD LNG projects and the reserves they have. Add to that a whole new gas-fired power industry, which will double or triple in size.

Are the majors in QLD going to give up their own economies of scale, and sell more of their precious gas into NSW? Clearly not.

Companies involved in the domestic energy sector, like db's friends at Origin who have recently invested in retail in NSW, and AGK and TRU, will need to prepare themselves for this structural change. It will be huge. One of those key moments when the fundamentals for an industry (gas) completely change.

And we have ESG, with the biggest resource in NSW, an imminent reserves upgrade, refusing to sign any GSA's, slap-bang in the biggest state with the fewest gas reserves, and a sector about to emerge.

What do you think will happen next?

"... a resource people will die fighting for..."

Yaq