next week could be the week., page-5

Here are some snippets from fridays conference.


WEST Australian Premier Colin Barnett has defended the state's contentious domestic gas policy, despite suggestions from Santos and BHP Billiton that the stance is slowing the growth of a shale gas industry that could drive up supplies.

Speaking at The Australian & Deutsche Bank Business Leaders Forum in Perth yesterday, senior Santos executive John Anderson said the US had been able to deliver a dramatic improvement in its energy security through free markets rather than government policy.

Mr Anderson said a surge in the Henry Hub gas price helped inspire a wave of shale-gas exploration in the US that defined massive reserves of shale gas and a steep downturn in gas prices, with the country now working towards becoming an LNG exporter.

"Five or six years ago, there was an estimate that the amount of LNG imports in the US was going to be around 80 million tonnes per annum," Mr Anderson said.

"That has completely flipped around. Now, they're looking at exporting LNG. It eventuated because there was a pricing signal to come and invest in that (shale gas) play."

Mr Anderson said it was pricing, rather than policy restrictions, that had encouraged Santos to invest in developing WA gas projects for the domestic market.

Mr Barnett said that while he didn't disagree with Mr Anderson's comments about the US, he continued to believe a domestic gas policy was necessary.

"I think one of the great weaknesses of Australia is that energy is clearly critical for the nations in this century, we have great energy resources, and yet we really don't have an energy policy," Mr Barnett said.

"All we can do to a limited extent in Western Australia is ensure at least some of that gas comes into the domestic market and I think that's sensible. Virtually every other country around the world has got an approach to its energy resources except for Australia."

BHP Billiton iron ore chief Jimmy Wilson said that while the company was "completely neutral" on the domestic gas issue, given BHP is both a major gas producer and energy consumer, Western Australia's shale gas potential could be better realised if the market was left alone.

"I actually believe that we should allow market forces to determine these things," Mr Wilson said. "If we could chase up the shale gas a little bit more aggressively and actually put that as an option, which clearly is obviously domestic, that is a great thing and I think there's an opportunity that has been missed there."


Mr Anderson agreed there was "a cracking opportunity" in WA for shale gas. "I think it's exciting and it would be fabulous to see the encouragement to continue to invest in that space, just as we saw in the United States," he said.

"I'm not suggesting we will get near that level, but the beauty of that investment will also be that there will be state-based royalties that get generated out of that shale and tight gas production if we can get that."

International studies have identified WA as a potential global hotspot for shale gas, with the Canning Basin in the north of state believed to be capable of hosting hundreds of trillions of cubic feet in gas. International energy heavyweights like ConocoPhillips, PetroChina and Mitsubishi have taken interests in shale gas acreage in the Canning Basin in recent years.

Fortescue Metals Group chief Nev Power said he supported anything that would drive a "highly competitive" energy industry in Australia. "At the moment it's ridiculous that it's cheaper and more competitive to import diesel and ship that all around the place than it is to use gas, which is right on our doorstep," Mr Power said.