nsw govt hints at coal seam gas incentives

Guess it was moderated cause I didn't posted the link ??

So I'll try again

From the AFR http://afr.com/p/business/companies/nsw_govt_hints_at_coal_seam_gas_kYbDhxNSX4emlOYEPdBi6N

NSW Resources and Energy Minister Chris Hartcher has suggested the government may consider incentives to industry to extract coal seam gas (CSG) that is used to meet local supplies rather than go for export through Queensland.

Mr Hartcher said on Tuesday that while the government views a gas reservation policy as a “last resort measure” to ensure adequate local supplies, it was essential to create a sustainable economic system that will provide enough gas for domestic growth.

“The NSW government is conscious of the need to provide incentives for industry to get the gas out of the ground while ensuring adequate domestic supply - and that may require a differential royalties system for external and domestic consumption,” Mr Hartcher told a coal seam gas conference in Brisbane.

“Ultimately, we don’t want to go through the process of extracting the gas only to leave the NSW market undersupplied.”

The coal seam gas industry in NSW is recovering from a stalling in exploration work over the past 18 months, as the government put in place its strategic land-use policy. Explorers such as Santos, Metgasco and Dart Energy are preparing to move in rigs to start drilling programs that will work towards starting commercial supplies within a few years.

At present, AGL Energy is the state’s only supplier of gas, but its CSG fields in Camden south of Sydney meet only about 5 per cent of NSW’s requirements.

Mr Hartcher said the government is “extremely conscious” of the need to ramp up the industry to avoid gas shortages and higher prices once the Queensland liquefied natural gas export plants start up in 2014-15.

Various analysts and consultants are warning that NSW faces a gas shortage around the middle of the decade as the supplies it currently relies on are sucked up to Gladstone to feed the LNG export projects, providing higher netback prices for the producers.

Industrial gas users are already struggling to secure new gas supplies at a reasonable price, Mr Hartcher said.

He cited Brickworks, which is forecasting the price it pays for gas in 2013 will be 79 per cent higher in NSW than it was in 2008, with a knock-on impact on building costs.

Also, Incitec Pivot chief executive James Fazzino has shelved the company’s planned $600 million ammonium nitrate plant in Newcastle and is instead looking to build a new plant in the US to tap into the country’s cheap gas prices, the minister said.

“These are the often unthought-of consequences of delaying the development of local projects,” Mr Hartcher said.

Federal Resources and Energy Minister Martin Ferguson also pointed to the local development of NSW’s coal seam gas reserves to alleviate a squeeze on gas prices and supplies for the state.

“Development of NSW’s CSG resources could ease a predicted tightening of supply and demand,” Mr Ferguson said.

“It could also place downward pressure on prices.”

Gas producers in eastern Australia are widely predicting wholesale gas prices will rise to $6-$8 per gigajoule within the next few years, from about $4 at present.