Good article in AFR, page-7

Think big: fix the eastern energy crisis with western gas

An op-ed in the AFR today by former WA Premier Colin Barnett. Excerpts:


A pipeline from the gas fields of WA to Moomba might cost $6 billion. But it would buy back our domestic energy advantage.

I have for the past two years advocated for the construction of a Trans-Australian Gas Pipeline from the north-west coast, where around 90 per cent of our gas is, to the existing gas distribution hub at Moomba in South Australia. That would be a true nation building project and something Australia needs right now. It would of course be a big project, but not a particularly complicated one.

The cost would be around $5 to $6 billion. That is a lot of money, but also far less than the existing LNG export projects and some of the proposed urban transport projects.

More to the point, with the correct policy setting the pipeline could be privately funded and operated under a government mandate. The superannuation funds are bound to be interested. The proper role for government includes a competitive bid process, the pipeline easement, aggregation of the gas supply and the guarantee of open access. It might also require certainty over transport tariffs and volumes for the first few years of operation.

It is worth noting that the 1,500 kilometre large diameter gas pipeline from the north- west coast to Perth was built in the early 1980s in less than a year. It is also worth noting that the current wholesale price of gas in Western Australia is around $3 to $4 a gigajoule compared to $9 to $11 a gigajoule on the east coast. The pipeline transport cost would be around $3 a gigajoule, leaving a significant margin.

Long distance pipelines are common throughout the world. For the east coast, a Trans-Australian Pipeline offers a reliable and cheaper supply of gas. The alternative of exporting LNG out of Queensland while at the same time importing LNG into Victoria and New South Wales, does not pass the pub test.

It implies liquifying Australian gas, shipping it around the coast and then re-gasification. It would also leave Australian consumers exposed to world LNG prices, which are likely to rise significantly from the mid 2020’s. Why should we give up what should be our energy advantage? It is also somewhat ironic that an 890 kilometre sub-sea gas pipeline has just been built from the Browse Basin to Darwin as part of the Ichthys LNG export project.

All that is needed is some of that pioneer spirit and the setting of a bold pipeline plan. Government and the gas industry can together fix the gas supply problem and at the same time give Australia a much- needed nation building project. It is not the full solution, but it will go a long way to solving the problem. Fiddling around with regulations just won’t do the job.
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Ash here. Big thinking from Barnett, most welcome. Major benefits would accrue to CTP from access to the Alice-Moomba section - transport price competition, diversity of customers and unconstrained market access.

And guess what: $4b of the money is sitting there in the NAIF fund.

Ash