Australian Petroleum Production and Exploration Association (APPEA) Chief Executive Malcolm Roberts has lauded the oil and gas industry for a raft of new gas supply deals helping to stave off a looming energy crisis in Australia, but says the Federal Government needs to do more to boost supplies and reduce prices.
However, while the peak body boss praised Queensland in the east for lifting gas production by 20%, making the “Sunshine State” self-sufficient with net gas surpluses flowing south of the border, and Victoria for record output in the offshore Gippsland Basin, Western Australia (WA) is in APPEA’s crosshairs for launching another inquiry into fracking.
Roberts said the latest inquiry by the Labor government of newly elected WA Premier Mark McGowan followed 13 similar inquiries into the science in Australia, a safe historic record of over 600 wells fracked in the state spanning 55 years and a WA Parliament investigation two years ago that found “no evidence to support activist demands that fracking must be banned.”
Five months before the parliamentary probe, Roberts said the WA Health Department had declared fracking “completely safe if properly regulated,” a finding supported by Australia’s Chief Scientist, Dr. Alan Finkel, who had declared that moratoriums and bans on natural gas exploration and development put Australia’s energy security at risk.
Roberts said that local companies that had spent $380 million on exploration in recent years, were increasingly looking to countries like Canada, as opposed to taking risks in WA where fracking moratoriums are in force pending the inquiry.
He said the moratorium and inquiry were both instigated at the behest of the militant Maritime Union of Australia, which had admitted onshore gas jobs could pose a threat to its offshore members.
Nevertheless, Roberts said initiatives in the eastern sector of the country were promising for the oil and gas sector.
“The industry acknowledges that the east coast gas market is tight and further supply is needed. Recent announcements have confirmed that approximately another 64 petajoules of gas will be delivered into the market—equivalent to 10% of total demand.”
“Since March, a dozen new gas contracts or new projects have been signed or announced to boost supply on the east coast.”
Roberts said government should now continue to build momentum and seize the initiative to reduce the cost and risk of developing new gas supplies in Australia.
“Independent analysis shows that regulation can account for 30% of costs during the first eight years of a project,” he said. “Reducing these costs during the exploration and early development stages—when businesses have no revenue—would help revive exploration and lower the industry costs which are eventually passed through to customers.
“Governments should be very concerned that onshore exploration is at a 30-year low.
“It almost goes without saying that states must lift their political bans on developing local gas,” he continued. “New South Wales and Victoria are heavy users of gas but have blocked local projects.”
Roberts also urged the Federal Government not to enforce export restrictions under its Australian Domestic Gas Supply Mechanism (ADGSM) to shore up local supply.
He said the Australian Energy Market Operator’s revised gas supply forecast for 2018 and the Australian Competition and Consumer Commission’s gas market review must be made public to enable all affected parties to give input before any decision is made under the ADGSM.
“The ADGSM has already raised global concerns about sovereign risk in Australia. Triggering the mechanism on flimsy evidence would only compound those concerns,” he said.