Gas industry update

Keep the cost of gas in Victoria down: Energy Networks Association

Australia’s 4.5 million gas customers face unnecessary supply uncertainty due to unclear development arrangements for the development of unconventional gas resources, the Energy Networks Association (ENA) has said.

Responding to the release of the Victorian Parliaments Inquiry into onshore unconventional gas in Victoria, ENA chief executive officer John Bradley said it’s vital unnecessary barriers to supply gas to the Australian domestic gas market are removed.

“Australian gas customers and Australian jobs depend on gas resources being developed in a timely way under robust regulatory frameworks,” Mr Bradley said.

“Policy certainty and predictable regulation puts downward pressure on the cost of gas – with benefits to consumers and the Victorian economy.

“It is also an important instrument to support Australia’s carbon abatement goals, natural gas from a distribution network delivers energy which is one-quarter to one-sixth of the carbon intensity of mains electricity.”

Victoria’s 2 million gas customers rely more on gas for their household energy needs than any other state in Australia, with Mr Bradley saying it’s vital to everyday conveniences such as heating, cooking and hot water.

“In contrast to the Victorian parliamentary inquiry, COAG Energy Council recently released its Gas Supply Strategy recognising the importance of bringing more gas supply to market and encouraging more suppliers,” he said.

The Committee was unable to come to a position on two proposed options: a ban on the unconventional gas industry in Victoria or a five-year extension of the current moratorium.

The Victorian Government will now consider its response, with a gas policy to be announced later in 2016. The final report of the Inquiry into unconventional gas in Victoria was released last December.


Clean air agenda shouldn’t just be hot air: Gas Energy Australia

The parallel management of a low carbon future and Australia’s National Clean Air agenda highlights how the country’s cleaner, cheaper natural gas is part of the global solution, according to Gas Energy Australia. Calling on all governments to be ambitious about clean air, and the related emissions standards, Gas Energy Australia CEO John Griffiths said carbon was only one of the emissions in question.

“Toxic emissions are estimated to kill 3000 Australians every year, which is almost three-times the annual road toll,” he said.

“While countries around the world are acting on both carbon and other pollutants, Australia runs the real risk for being the dumping ground for old technology clunkers.

“Some operators are already commissioning LNG powered cruise ships to meet new European standards, leaving the risk that their older fleets will be shifted to Sydney Harbour and the Great Barrier Reef. Why? Because we allow it.”

Mr Griffiths said renewables only offer part of the solution, because 30 per cent of Australia’s energy usage is transport related and renewables cannot offer reliable base-load off-grid power and there is a strong case for gas fuels as part of the transition to a lower carbon, lower polluting future.

Natural gas fuels for example emit up to 25 per cent less CO2, 99 per cent less SOx, 75 per cent less NOx and a reduction of particulate matter of 85-100 per cent.

“You can’t run large trucks on wind power or cruise ships on solar and at the moment they are fuelled by higher polluting diesel and bunker oil,” Mr Griffiths said.

Mr Griffiths said Federal Government green schemes fail to fund gas technology, despite it often being cleaner and better fit for purpose than the technologies prescribed. For example, ARENA will fund a solar-diesel hybrid generator even though it is higher polluting than a natural gas generator.

Other schemes will fund a solar-electric hybrid hot water system but not a gas hot water system with lower emissions.

“Rather than prescribing which technologies can and can’t be funded we believe the clean air agenda and the green schemes should support and fund the best environmental outcomes. Expanding the clean air agenda to the power of gas fuels, for both lower carbon and lower pollutants, is not difficult and rewards lower pollutants as well as Australian production and innovation,” Mr Griffiths said.


Base unconventional gas on sound policy, not fear: science community

Provided best practice is followed, industry observers say unconventional gas can be produced in an environmentally responsible manner that provides significant societal benefits – but only if it has community support.

The controversy surrounding unconventional gas was the theme for the December issue of ATSE Focus, the Academy of Technology and Engineering’s bi-monthly issues magazine, which addresses many of the nation’s important challenges.

Coal seam gas and ‘fracking’ are fighting words in Australia and overseas, Professor Craig Simmons wrote.

“They badge one of the most contentious, controversial and emotive issues of our time. There are legitimate public concerns about what impact CSG and fracking may have on human health and the environment. There are myriad complex social, economic and environmental factors at play.”

The potential for unconventional hydrocarbon development both in Australia and overseas is enormous, according to Professor Simmons, who added energy market supply and demand issues will control how these resources are ultimately developed into the future.

“A much greater effort must be undertaken to determine how likely ‘something bad’ happening may be and over what time scales and spatial scales it may occur,” he said.

“We need to be much more quantitative and scientific about this contentious discussion.”


Release gas resources now because tomorrow is too late: Energy users

Energy users have been condemned to accept continuing gas policy uncertainty, high gas prices, and the unpredictability of supply with the release of the Victorian Parliamentary Inquiry into Onshore Drilling and Fracking for Gas, according to the Energy Users Association of Australia (EUAA).

“In a major blow to industrial gas users employing thousands of Victorians in already job-stressed regional communities, the recommendations from the parliamentary report condemns Victorians to the same supply uncertainty already gripping other parts of the eastern states,’ EUAA CEO Phil Barresi said.

“It is disappointing the once great gas advantage that made Victoria a stand out attractive industrial location with its affordable and secure energy is being put into jeopardy by a lack of bi-partisan agreement.”

Whether it’s a five-year moratorium as proposed by the Coalition members or an ongoing lifetime moratorium as recommended by the Labor government members of the Committee, jobs are at risk, according to Mr Barresi.

“At risk are tens of thousands of Victorian jobs in regional communities that depend on gas as both an energy source and feedstock to manufacturing process,” he said.

“Industry looked forward to this Inquiry having the ability to provide clarity and assurance that conventional onshore gas drilling should not be confused with the more contentious fracking debate.

“A thorough investigation of the problem at hand would have been a minimum expectation, whereas instead we have a report that has by and large confirmed the well known existing political positions of all parties, and shrouded in the controversy of being under-resourced – thereby distracting us from the real problem at hand.”


Export LNG an agent of change in Australia’s domestic gas markets: AEMO

The Australian Energy Market Operator’s (AEMO’s) second annual National Gas Forecasting Report (NGFR) highlights a transformation of eastern and south-eastern Australia’s interconnected gas markets in the next five years to 2020, following the ramp-up of gas consumption to supply liquefied natural gas (LNG) exports. Annual gas consumption is then projected to remain relatively flat for all sectors throughout the rest of the outlook period to 2035.

At the forefront is LNG consumption, which is forecast to grow at an average annual rate of 32.5 per cent in the short term (to 2020) to supply LNG exports. Total annual LNG consumption is forecast to increase from approximately 354 petajoules (PJ) in 2015 to 1444PJ by 2020.

“LNG export facilities in Queensland have brought international demand and international pricing to Australian gas markets. This is expected to more than double total gas consumption in eastern and south-eastern Australia in the next five years, compared to aggregated consumption in 2014 before the Queensland LNG projects began,” AEMO managing director and chief executive officer Matt Zema said.

Mr Zema said other than LNG, the most significant change in gas consumption forecasts across the
20-year outlook period was in the gas-powered generation (GPG) sector.

“A short-term decline is forecast in GPG consumption in the next five years, attributed to several factors – a response to an anticipated rise in wholesale gas prices; coupled with the pending expiration of existing gas supply contracts; the retirement of GPG plant Smithfield Energy Facility in New South Wales in 2018; and, a projected increase in renewable generation incentivised through the current renewable energy target,” he said.

“Assuming today’s market conditions and policy settings continue, we expect total annual GPG consumption to increase to around 184PJ by 2035, as industry invests in a range of generation sources to meet forecast electricity demand and replace more than 2000MW of announced coal-fired generation withdrawals from the National Electricity Market.”