Maybe one day......
Think big: fix the eastern energy crisis with western gas
A pipeline from the gas fields of WA to Moomba might cost $6 billion. But it would buy back our domestic energy advantage.
Colin BarnettColumnist
Oct 23, 2019 — 2.43pm
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I sometimes wonder whether we have lost that pioneer spirit along with the courage to think big. Australia’s iconic projects belong mainly to the past.For example, the Trans-Australian Railway (completed in 1917), the Sydney Harbour Bridge (1932), Tullamarine Airport (1970), the Ord River Dam (1972), the Sydney Opera House (1973), the Snowy Mountains Scheme (1974), and even the new Parliament House (1988).
These days it seems to be all about urban rail and road projects. They are both needed and expensive, but they hardly fit the description of "nation-building". And we don’t even have a high-speed train between Sydney and Melbourne.
Long distance gas pipelines have proven effective around the world. EPA
The failure to fix the east coast energy crisis is proof of what I say. How can it be that a country so rich in energy resources can be held back by blackouts and excessively high energy prices. Consumers are scratching their heads and energy intensive businesses are closing their doors.
We might be just one more blackout away from a total loss of public confidence.
Central to the energy crisis is the shortage of gas, and its high price. A reliable and long-term supply of gas is essential for energy security.
Australia has just become the world’s biggest exporter of gas in the form of LNG (liquefied natural gas). The big international companies, to their credit, have invested many billions of dollars in the export LNG business, but for most their ownership and decision-making is to be found elsewhere. Perhaps it is time for a gentle reminder that they don’t own the gas, the Australian people do.
A modest reservation of some of that gas for the Australian market is just good policy. It's not a sovereign risk, because it is our gas. With less than half the emissions of coal, it makes sense to put more gas into our energy mix. It might also help the energy industry to regain some of the loss of public support among local consumers.
It might even help the gas export industry to avoid unnecessary government regulation and therefore to be more certain of its ability to meet full export capacity. We might be just one more blackout away from a total loss of public confidence. It's in the long-term interest of the gas export industry to ensure the domestic market is looked after.
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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.
