THE Federal Minister for Resources Matthew Canavan MP has accused the NSW, Victoria and Northern Territory governments of using “voodoo science” to block gas developments in their jurisdictions.
Speaking on the subject of East Coast gas shortages at a gas conference in Sydney, the Minister said it is critically important for state and territory governments to end their “voodoo science” on gas.
” I am sick of hearing poorly argued reasons to justify the various state and territory government bans and moratoria on gas development. These policies are ‘anti-science and they are bad economics,” Minister Canavan said.
“It is worse when some governments defend their own bans on coal seam gas by arguing in the next breath that the coal seam gas resources of Queensland should be sent down to them!
“The Australian government is committed to finding ways to develop more gas. We do not control the regulation of onshore gas development but we will do what we can to assist because it is critically important that we maintain gas security for our national development,” he added.
The Minister also told the audience that while some have linked Queensland LNG gas exports with East Coast shortage issues, it is in fact the opposite.
“Some may bemoan that our gas markets are now subject to international markets thanks to the development of Queensland gas. However, if it were not for the investments in Queensland, the gas situation on the east coast of Australia would be much more dire,” the Minister said.
“The last decade in gas markets has seen two major developments, the development of a large east coast gas export industry and the decline of Australia’s traditional supplies of cheap gas in the Bass Strait. The first of these is commented on more than developments in the Bass Strait so I will start with the Victorian situation first.
“In the Bass Strait, gas production is expected to fall from a peak of around 420 PJ in 2016 to 319 PJ in 2022. This drop of about 100 PJ represents more than 15 per cent of the expected east coast domestic demand for 2018. It is a big fall.
“That slack is being made by the comparatively massive gas developments in Queensland. This year Queensland will produce 1459 PJ of gas, more than 3 times what is produced in the Bass Strait. Most of that is exported but the Queensland gas industry is a net contributor to Australia’s gas supply.
“The ACCC estimates that, in 2018, Queensland LNG projects are contracted to supply domestic consumers with net 85 PJ of gas; that is, they will sell 271 PJ to the domestic market while purchasing 186 PJ.
This net supply is more than 13 percent of the projected east coast domestic demand.Without Queensland we would have less gas and higher prices, and without export markets Queensland gas production would not have developed to the extent it has.
However, gas production in Queensland is more costly than in the Bass Strait. The ACCC estimates that the cost of production in Queensland’s coal seam gas fields is $5-6/GJ – much higher than the traditional costs of gas production in the Bass Strait. And to get that gas to southern markets it costs another $2 / GJ or so. There is no government policy that can change these costs, and we can’t supply gas to consumers at below the costs of production,” the Minister added.