Budget review: cooking with gas

Gas and pipelines were some of the big winners to come out of last night’s Federal Budget announcement, with plenty of funds aimed at fixing Australia’s energy crisis.

The Turnbull Government has allocated $5.2 million to a cost-benefit analysis study into the construction of gas pipelines from the Northern Territory and Western Australia to the east coast, through the Moomba hub in South Australia.

“Improving the transparency, competitiveness and long term security of Australia’s east coast gas market is a priority for the Government as gas is a crucial energy source as we transition to a low carbon economy,” said Minister for the Environment and Energy Josh Frydenberg.

To expand gas supply as part of a package of about $90 million, the Government will commit $28.7 million over four years from 2017-18 to encourage and accelerate the responsible development of onshore gas for the domestic market.

The Government will also extend funding by $30.4 million for the Bioregional Assessments program to asses any potential impacts on waterways and aquifers from unconventional gas projects.

Over the next three years the expanded program will examine new gas reserves and provide independent scientific advice to governments, landowners and the community, businesses and investors on future secure and reliable gas supply.

There is also $19.6 million committed over four years to the Gas Market Reform Group to better facilitate gas trading, encourage greater competition to place downward pressure on prices and ensure gas markets are most transparent and accountable.

The Australian Energy Market Operator will receive $2 million to improve publication of real time assessment of gas flows and market analysis.

Finally, the Government will provide $6.6 million over three years to the Australian Competition and Consumer Commission to establish a monitoring regime for the gas market by using its inquiry powers to compel the gas industry to provide greater transparency of transactions in the gas market, including factors affecting supply and pricing.

Industry response

The oil and gas industry has welcomed the initiatives announced in the Commonwealth budget to support the delivery of new gas supply into the east coast market.

Australian Pipelines and Gas Association (APGA) Chief Executive Peter Greenwood said the Budget set out measures totalling $86.3 million over four years from 2017–18 to increase gas production and support affordable electricity prices for households and industry.

“These measures recognise the critical need to bring additional supplies of gas to Australia’s markets,” said Mr Greenwood said.

“Measures amounting to almost $60 million are directly focussed on increasing gas supply, with $30 million for additional scientific assessments of unconventional gas projects and $29 million to encourage responsible development of onshore gas for the domestic market.

“These are both timely measures that demonstrate the Federal Government’s commitment to unlocking Australia’s gas reserves.

“It is now incumbent on the States and Territories to cooperate with the Federal Government to enable access to reserves to ensure secure energy supplies for all Australians.

“The interest in gas pipelines reflects the vital role in Australia’s energy markets that gas pipelines play.

“However, it is important to remember that new pipelines will do little to address energy security if there is no new production to provide more gas into the system.

“The Federal Government should also be mindful that some of the gas market reforms under way, such as the arbitration framework and the day-ahead capacity auction will change the investment environment for gas pipelines.

“It’s important that the right balance is achieved between ensuring fair access to pipelines and maintaining investment signals to allow pipelines to be built and expanded as new gas supply is developed.”

Australian Petroleum Production and Exploration Association (APPEA) Chief Executive Dr Malcolm Roberts welcomed the Budget but said there is a pressing need to increase supply.

“The east coast market will require up to $50 billion in investment in the next 15 years to meet demand,” said Dr Roberts

“The Commonwealth’s new $28.7 million East Coast Gas Development Program will help pull forward new gas supply projects.

“APPEA also welcomes the $19.6 million allocated to the Gas Market Reform Group to accelerate reforms agreed by the COAG Energy Council to improve gas market efficiency and transparency and the funding to the Australian Competition and Consumer Commission for regular market monitoring and reporting on the east coast gas market.

“Progressing these reforms and improving market transparency is vital.

“It is also pleasing to see the Government promoting the vital role of independent science in the loud but often badly informed debate about the onshore gas industry with $30.4 million in new funding to support bioregional assessments.

“The Minister for the Environment and Energy, the Hon Josh Frydenberg MP, should be commended for ensuring local communities have access to genuine information – not alternative facts – about environmental issues.”

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