I refer to a story published in Echonetdaily on 26 August headed ‘Gas shortage a furphy, Tweed Council told’. In challenging the advice that NSW is facing gas shortages it is important that people consider some of the many facts present on the issue from independent sources.
The Australian Energy Market Operator (AEMO) has advised that NSW is facing potential gas shortages. Under their worst case scenario, which excludes NSW bringing on any of their own gas supplies, we will face shortages in 2018 which could last until 2020.
This is not because Australia has a shortage of gas but because NSW only produces five per cent of its own gas. We import the other 95 per cent from other states.
As buyers, we are now competing with other buyers and other countries for most of our gas supplies. Forward contracts with buyers happy to pay a premium price means there is less gas available to NSW.
With no new, local supplies of gas we can guarantee that not only will we face shortages as outlined by AEMO, but it is highly likely we will be required to pay a significantly higher price for any gas supplies that are available for sale to NSW.
So the question is what to do about this situation? Some will say renewable energy, but right now, wind farms and solar energy produces 12 per cent of NSW needs and can also face stiff community opposition.
And renewable energy does not address the situation where gas is not just an energy source but a key ingredient in industrial processes, such as fertiliser, plastics, pharmaceuticals, fabrics and is also used to manufacture a wide range of industrial products such as ammonia, methanol, butane, ethane, propane and acetic acid.
Gas is also used as a heat source to make glass, steel, cement, bricks, ceramics, tile, paper. Gas is also used by medical facilities for incineration of contaminated waste.
If we want to put downward pressure on energy prices and secure supply, the answer is the growth of viable local gas projects. It’s that simple.
But we also realise that the safe and sustainable development of the industry is critical. We must balance the needs of the community, the economy and the environment and that’s what we are doing by introducing some of the toughest conditions in Australia regarding coal seam gas operations.
New requirements include a two-kilometre exclusion zone around residential and village areas, an Aquifer Interference Policy, a Code of Practice for Well Integrity, banning harmful BTEX chemicals and evaporations ponds. In all there are 30 new measures.
These requirements ensure world’s best practice is being followed in NSW and that land and water is protected so farmers and industry can co-exist.
The fact is in NSW over 400 heavy industrial users and about 35,000 NSW small businesses are reliant on gas supplies. This represents hundreds and hundreds of jobs, not to mention gas is featured in all sort of products we take for granted each day from bricks to plastic. In addition, more than a million households rely on gas each day for cooking and heating.
Without this gas, further investment in coal-fired electricity infrastructure would be required, raising costs further. And businesses using gas as an ingredient would potentially have to move inter-state or off-shore.
NSW is at a crucial stage for energy supply and the NSW government is determined to head off the problem, but it needs to make its decisions based on science, while balancing the diverse range of economic, social and energy security needs of the citizens of NSW to deliver the best outcome possible.
Kylie Hargreaves, deputy secretary, Resources and Energy, NSW Trade & Investment