price on carbon = new gas-fired power industry

Politics aside and thinking about the carbon tax from a purely investment perspective, there is about to be a seismic shift in the value of uncontracted gas resources and reserves.

Currently, there are gas-fired power stations operating in areas where there is not a lot of indigenous coal (like in South Australia). And in QLD, where there is a Government mandate for a 15% percent of gas for gas-fired power.

But on the passing of a carbon tax (and it appears as if Labor, The Greens and the Independents have come to an agreement), a whole new industry in going to open up.

One piece of legislation, and overnight, the tap can be turned on for investment decisions relating to building gas-fired power stations, and purchasing gas for gas-fired power stations.

For some years, no one in their right mind would finance and built a new coal-fired power station. But nor has investment in gas-fired power been able to proceed either. Some time ago, someone provided this thread with a list of all the gas-fired power stations that were approved, just waiting for certainty on the price of carbon. I think the number was over 10.

Back to ESG. So, on the passing of a carbon tax, that investment back-log is about to end. All of a sudden, the gas sector in this country gets a whole lot bigger. The price of gas, the VALUE of uncontracted gas reserves, goes up.

I remember some time ago DC saying how QLD had a big head start on NSW, but that that advantage was about to change. Well, with the introduction of a carbon tax, there will be an almighty gas-rush in NSW. So many customers, so few gas reserves and a burgeoining gas-fired power sector.

And, ESG will be having a large reserves upgrade at almost the some time...

QLD, for sure, will not be selling gas southward. In fact, the QLD LNG projects will be sucking gas from everywhere else. Santos are already having to buy gas off Cooper Basin JV partners to meet the shortfall. BG is having to buy ramp-up gas off Origin.

So in NSW and QLD we will have two competing needs for ESG's gas - LNG, and this new sunrise industry in gas-fired power.

The ORIGIN of a new era in gas in NSW, and Australia.

And ESG is sitting on the biggest uncontracted gas resource, in NSW.

Yep, ESG is and will be a resource that, in the words of David Knox, people will "die fighting for".

Yaq