Head-to-head: the Federal Resources and energy portfolio
Gas Today — Spring 2013
With the 2013 Federal election fast approaching, Gas Today speaks exclusively with Federal Resources and Energy Minister Gary Gray and Shadow Minister for Resources and Energy Ian Macfarlane about their previous experience within the Australian gas industry, and their policy platforms should they succeed at the election.
Gary Gray
You have previous experience in Australia’s oil and gas industry, namely through your employment at Woodside Energy. What other industry experience do you hold?
I spent six years at Woodside. In this time, I developed a deep appreciation of the importance of government and industry working closely together to meet the challenges facing industry.
Proper consultation and cooperation creates certainty and allows both government and industry to take advantage of each other’s expertise and ensure the sustainability and success of economic growth.
What is your position on developing a national domestic gas reservation policy?
The Federal Government does not support reserving gas for domestic use. Gas reservation policies do not help to bring a greater supply of gas into the market as they act as a disincentive to investment.
The operation of an effective gas market is essential, which is why the Standing Council of Energy and Resources (SCER) is looking at ways to develop a more transparent, efficient and competitive gas market in Australia.
Australia’s LNG projects and their associated infrastructure have almost unanimously experienced major cost blowouts, with some only mid-way through their construction. Will there be any policies that the Federal Government will look to develop in order to prevent further cost blowouts?
The Federal Government is working to have the right governance and policy settings in place to ensure Australia remains an attractive investment destination. We are working with industry to develop stable regulatory frameworks and clear policy direction to contribute to lasting solutions.
Ongoing reviews of offshore petroleum regulation to remove areas of regulatory overlap and reduce the regulatory burden on industry help to reduce costs. The Government is committed to minimising duplication of requirements between the offshore petroleum legislation and the Environment Protection and Biodiversity Conversation Act (EPBC Act), in particular via accreditation of the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and the Offshore Petroleum and Greenhouse Gas Storage Act (Environment Regulations) under the EPBC Act.
We as a nation must be conscious of the cost of delivering projects in Australia and to remain competitive through efficient use of increased export capacity and productivity improvements.
The NSW and QLD state governments have recently implemented major pieces of policy relating to the coal seam gas (CSG) industry. Will you be looking to develop a Federal-level CSG policy?
The Government supports mining across Australia subject to appropriate regulatory, safety and environmental approvals.
The Government is working with states and territories to develop a National Harmonised Regulatory Framework to provide a guidance and reference tool for Australian federal, state and territory government regulators.
Ian Macfarlane
How does your background as a farmer and as president of the Queensland Graingrowers Association assist in developing effective policies for the natural gas industry?
While I left the land 20 years ago, I’m still a farmer at heart, so I understand the deep connection that farmers have to their land, both in terms of income for themselves and their families, but also as custodians of the farming land and the agricultural tradition for future generations.
The two groups – farmers and miners – are not natural enemies. In fact both groups have been working together for decades because Australia has long-standing farming and mining traditions.
The key to addressing and resolving the legitimate concerns of landholders is to make sure there is full and transparent communication between farmers and their local communities and mining companies.
There is increased uncertainty regarding supply and demand of Australia’s natural gas for the next five years. What would the Coalition do to ease these pressures?
New South Wales is facing crunch time for its gas supply from 2016 and it will be up to government – both state and Federal – as well as the gas industry – both producers and consumers – to work out a solution. Failure to do so will cost thousands of jobs in industries in Newcastle, Sydney and Wollongong.
The solution to the possibility of a gas shortage is to work to ensure the CSG industry in NSW can proceed. The gas industry needs to be allowed on to land where operators have been given the permits, where the landholder says they can and drill without intervention from extremist Greens.
The NSW Government is working toward this, to ensure there are conditions in place that will allow the CSG industry to proceed in a way that means it can co-exist with other land uses and with landholders.
Ensuring a supply of gas for NSW from CSG will help ease the upwards pressure on gas prices.
This increased demand for gas will come at a time when the domestic gas supply is predicted to be running out. Does the Coalition plan to work with the states to make more quantities of gas available?
The Federal Coalition does not support the push for a mandatory gas reservation policy – it is simply not appropriate to change the rules for investors mid-stream and demand a certain percentage of the gas they extract is reserved for domestic use.
Instead of a gas reservation policy applied to existing projects, it would be far more effective (and less destructive to the industry) to promote the idea of acreage reservation for domestic production on new projects, whereby certain areas are set aside, wholly or in part, for the extraction of gas for the domestic market.
Under such a policy, investors would know exactly where they stand and it would not apply to existing projects.
A Federal Coalition Government would engage with industry, gas users and the states to strike the right balance, without resorting to a blanket gas reservation policy that will damage the Australian gas industry in the long run.
What policies would the Coalition look to implement in order to continue growth in the gas industry?
The Coalition understands and respects the contribution the energy and resources sector makes to the national economy, as well as in regional towns and communities.
A Coalition Government would repeal the carbon tax and the Minerals Resource Rent Tax, thereby removing two of the most significant drags on the entire energy and resources sector. The Coalition is also committed to working with the sector to put in place policies that encourage growth and investment.
The Coalition also wants to work with the state governments to remove much of the red and green tape that bogs down project applications and development. There’s too much duplication in this area and that has the effect of driving up costs and causing extensive delays, in some cases adding months and years to project development.
(20min delay)