Unlocking the golden age of domestic gas supply

The right policy settings are vital if Australia is to realise its domestic gas supply potential, according to Jemena Limited executive general manager strategy regulation and projects Shaun Reardon.

Addressing delegates in Adelaide at the opening of the 2013 convention of the Australian Pipeline Industry Association (APIA), Mr Reardon said the Australian energy has the opportunity to unlock the golden age of domestic gas supply, however, government needs to start to level the playing field for gas-fired electricity generation. He also acknowledged if gas prices spike to unsustainable levels in the short term, government needs to undertake temporary action to prevent large gas-reliant business from moving offshore or ceasing operations.

“Bringing forward gas supply will need a policy that allows the benefits of this country’s valuable gas resources to be maximised. The gas industry has an important role to play here by engaging with local communities to understand and respond to their concerns,” he said.

Mr Reardon, who is a member of the APIA Board, said industry needs to be careful not to compromise the efficiency of current gas markets.

“Any reforms in this area need to be supported by an analysis which demonstrates improvements to market efficiency. Without careful consideration and analysis, policy may impose a regulatory burden increasing costs to customers with little benefit,” he said.

He also called for the establishment of a technology-neutral emissions intensity scheme for electricity generators to encourage the next wave of generation capacity investment, which is expected to occur from 2020 onwards.

“This would allow gas to be used as a cost-effective, reliable and clean source of electricity generation,” he said.

Mr Reardon said in the event of a short-term spike in the price of gas, governments may need to take temporary action to protect against very high gas prices causing job losses from some trade-exposed businesses closing down or relocating to other countries. These are businesses that would otherwise be sustainable in the long term.

“Trade-exposed manufacturing operations which use large volumes of gas are most at risk to such a spike. To ease transitional pressures, temporary, targeted assistance for such trade-exposed industries would be justified,” he said.