Today, AI Group made an important statement in relation to gas production. It is reproduced below:
“The clamp down on gas production in New South Wales and the calls for similar steps in Queensland should ring alarm bells for both industry and the community alike,” Australian Industry Group Chief Executive Innes Willox said today.
“Big employing industries are concerned that the already tight gas market could become disastrously short of supply if State and Federal governments don’t tread carefully in responding to community worries about coal seam gas. Right now we are seeing a domino effect, as one government after another puts roadblocks in the way of resource development under pressure from a public that does not yet see the risks of a gas squeeze.
“Steps already taken by governments include exclusion zones, setbacks, additional layers of approval, and even outright moratoria.
“Ai Group has been warning for some time that supply is tight and prices are rising due to the looming gas export boom. Many have assumed that high gas prices would encourage more production and prevent an extended supply squeeze. But this simply will not happen if governments feel obliged to clamp down ever harder on coal seam gas.
“Even higher prices and a permanent supply crunch would result. That would hit jobs, investment and household budgets, not just in Gladstone and Brisbane but in Sydney, Melbourne and Adelaide.
“Governments, the community and the media need to weigh those risks in the debate over coal seam gas. This resource needs to be developed safely; but if it is not developed at all, the costs will come hard and fast.
“Many industries depend on gas. It’s an essential feedstock for many basic chemical products that underpin other industries and everyday life. It’s a clean, efficient source of energy for manufacturing and the resources sector. And gas plays a key role in electricity generation, powering both low-emissions baseload generation and the peaking plants that keep our lights on when demand surges.
“But despite the rich reserves of gas in the ground, secure and affordable gas supplies are increasingly hard for domestic users to acquire in the Eastern Australian gas market. Liquefied Natural Gas exports are set to triple the demand for gas on the east coast. A huge amount of production will be locked up to fulfil those export contracts. The result for domestic industry is an extremely tight gas market and prices rapidly rising to export parity. Stalling the development of new production will make these problems much worse.
“Where there are risks in extraction these should of course be addressed. The regulatory regime needs the confidence of all serious stakeholders. But gas supply is far more important, and fragile, than many people realise. Unless we take a calm and balanced approach we will face serious unintended consequences,” Mr Willox said.
