If anyone thinks gas is absolutely essential for NSW industries...

If anyone thinks gas is absolutely essential for NSW industries and domestic market, then look past the protesters because at the end of the fear mongering and debates on misinformation; you either have gas or you don't.

Couldn't be a better time to invest in the (currently low-beat) NSW gas. IMO.

Have a good weekend!

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February 28th, 2014 | Author: Keith Orchison

Surfacing from the Australian domestic gas outlook conference in Sydney this week, one is immediately greeted by all sorts of guff floating around in the media, including a scare campaign kicked off by the NRMA about our imports of transport fuels, leading to it wanting to curb the LNG export business.

One does have to wonder what some of these people sprinkle on their hand-cut muesli and yoghurt of a morning.

The standard of presentation and debate at ADGO was of a far higher standard, although offering a wide set of views that at least some there felt only added to their sense of confusion and frustration at the present situation.

Catching up on what had been in the media and on the Web while I was ensconced in the ADGO hotel venue, I find a wholly sensible and straightforward synopsis of a key part of the situation on the APPEA website in the shape of a guest blog from AGL Energy’s Tim Nelson. It makes an effective antidote for some of the conspiracy-laden ranting the “Sydney Morning Herald” continues to publish.

Nelson notes that concern about future gas supplies for New South Wales is justified – but one needs to understand who will cop the hit. “Household supplies,” he says, “are likely to be unaffected. Most of the impact in terms of physical supply and pricing will be felt by large energy-intensive businesses.” Overlaying this, of course, is the fact that said households are going to cop increases of about a fifth in their gas bills in the new financial year and the price rises won’t stop there. One of the points of discussion at ADGO was what the householders will do when they don’t like the gas price pain – shift to reverse cycle air-conditioning for their heating at least?

All the blather we are getting in the media at the moment can’t change the basic problem for NSW. As Nelson explains, gas from South Australia that has been available to the State in the past is almost certainly going to flow north to the LNG trains at Gladstone – an entirely natural seller reaction to where the best sales value can be realised.

Do the large number of Cooper Basin company shareholders domiciled in Sydney think this should not be the case?
This leaves NSW reliant on a single source – Victoria. Nelson, speaking for one of the largest gas retailers, says the Eastern Gas Pipeline does not have sufficient capacity to meet NSW peak demand, even with the recently-announced expansion work. Without more gas production within the NSW borders, and its availability before 2018 is pretty unlikely, there may come times in the winters ahead where shortfall regulations have to be applied – and it is the large industrial users who feel this ahead of hospitals and households.

The State Resources & Energy Minister, Anthony Roberts, acknowledged at ADGO on Wednesday that, without these new supplies, load-shedding may need to be used – and he noted that 500 commercial customers in NSW account for 75 per cent of the gas demand. (The 1.3 million householders on gas account for 10 per cent.)

As the ADGO presentations indicated, there are a large suite of market developments that can be pursued for the longer term benefit of east coast gas customers – the challenge for policymakers is to choose what is to be done and engage in timely and efficient rolling out of the necessary official steps. That there are considerable opportunities to provide additional benefits to the national economy and to Australians generally through getting this process right is obvious to all – except the radical environmentalists for whom the game’s name is saying and doing anything to impede fossil fuel use.

There are others in the rural community, as speakers at ADGO also made clear, with a significant need for better information and confidence in regulation before they can wear coal seam gas developments on their land or close to where they live.

To me, the need for a NSW equivalent of the Queensland Gas Fields Commission is crystal clear, but there doesn’t seem to be any impetus for it to be created. The contrast between Queensland and NSW in this environment grows ever more stark. Indeed, it was highly notable that ministers and senior officials from western and northern Australia speaking at the conference spent most of their time dwelling on the opportunities that can be unlocked – like the shale resources in WA, the Northern Territory and the Cooper Basin stretching across the South Australian and Queensland border – than on the problems to be resolved.

Queensland Energy Minister Mark McArdle told the ADGO audience: “NSW, and Victoria, will have to accept the consequences (of their policy approaches).” Just so – and painting the NSW situation as a conspiracy of the big, bad fossil fuel business, as continues to happen, won’t alleviate these consequences one whit.

In summing up at the end of ADGO, I suggested that we all know we are on a journey in the domestic gas markets but we are still having great trouble in agreeing on the destination, our mode of transportr and on navigation.

For NSW in particular the critical question is how much time is left to sort things out before the wheels fall off the cart? It would be generous to say “not much.” The cold reality is that the winters of discontent for NSW are just ahead and the community deserves to be told by those in authority exactly where things lie.