Gas Shortage coming to Victoria 2023-2024, page-3

After I found the information about AGL and their reason for wanting a gas import terminal starting in 2017 before getting knocked back by the government for environmental reasons I decided to dig a little deeper and try to connect the dots.

Gas shortages and dwindling supply has been on the cards for a while in Victoria where the Bass Strait has basically produced some 30% of Australia's gas in the past and used to supply through pipelines up to NSW and South Australia as well.

I believe the thinking of why new projects of cheap gas directly connected from the supply point is less favourable is in a private gas market the suppliers of gas are only interested in controlling the supply, dictating the price, and have the flexibility in their model to supply gas, convert gas to electricity and later hyrdogen to somehow become "green" from burning a fossil fuel shipped from half way across the country and possibly the world on ships that run on diesel. Seems crazy but the lack of clear direction by the government to have a transition plan like create a cleaner coal fired power plants near the source of the coal and slowly transition then to more sustainable options has led to opportunistic ventures by big players like Twiggy who owns AIE Australian Industry Energy and has been given the go ahead to build the Port Kembla gas import termial and pipe connecting the gas to Victoria by flowing the gas back south through the existing Jemena pipeline know as the Eastern Gas Pipeline. Twiggy is also looking at building a gas fired electrical power station also, meanwhile a supply project aimed at lowering gas prices from Santos at Narrabri is getting overshadowed by the Port Kembla project.

Another gas import terminal is proposed at Geelong to supply gas in a similar fashion. These plants have to refine the LNG back to a gas using huge amounts of sea water and supposedly dumping chlorine in part of the process causing envrionmental concerns.

The outlay for these terminals seem to be at the $250m mark and provide the flexibility of providing gas at the market price supplied on ships with a probably guaranteed supply life making it the easiest solution for gas retailers to bring gas to the market while protecting themselves against government changes in policy with minimal outlay.

What does this mean for companies like EMP and BPH. NSW produces little of its own gas and gets its supply from QLD & VIC. The Port Kembla project will supply about 390 TJ/d to VIC and 485 TJ/d to NSW. In Victoria the shortage is real and by 2023 the amount of gas being supplied will likely be about 670 TJ/d down from about 950 TJ/d, but with the new supply from Port Kembla by 2023 this will bring supply up to about 1060 TJ/d. The catch is that Victoria use this amount of gas in a normal winter but every 2 years at peak need about 1160 TJ/d so there is a shortfall still at peak. So the Geelong terminal or another gas supplier like EMP at around 80 TJ/d is needed to meet the shortfall.

In summary gas is still needed from companies like EMP but the big boys have done the deals with the government to supply gas using a flexile business model that is more energy intensive to bring to market. Probably zero carbon gas will be purchased by buying gas from plants that sequester the carbon to offset the project, but apart from the feel good carbon credits there will be far more energy used with ultimately higher gas prices to ensue.