Canberra-NSW Deal Helps Upstream Gas: Industry

New South Wales will upgrade parts of the east coast power grid, help pay for two new interstate transmission links and back emissions reduction projects following a deal between New South Wales (NSW) and Canberra announced January 31. The NSW government in return has committed to help bring on new supply of gas. Reuters reported the deal would cost A$2 ($1.4)bn.

The Australian Petroleum Production & Exploration Association (Appea) said the announcement by prime minister Scott Morrison and premier Gladys Berejiklian underlines the importance of developing the state’s significant natural gas resources for the benefit of its homes and businesses, and in lowering emissions from the state’s coal-dependent electricity grid.

The Narrabri gas project, which is still awaiting final environmental approval after years of assessment, could deliver up to half of NSW's gas needs. The operator of the project, Santos, has pledged to deliver all of its gas supply to the domestic market. The alternative would be liquefaction at Santos' LNG plant and export to Asia.

Appea said the economic case for developing local gas resources is irrefutable – well-paid and secure local jobs, state royalties, more secure supply and downward pressure on gas and electricity prices. “If industry can further explore and develop gas resources with governments allowing proper environmental assessment and approvals processes to occur, Australia can continue its shift to a lower carbon, sustainable energy economy," said CEO Andrew McConville.

“It’s important for Australia’s oil and gas industry to be recognised for the positive role it can continue to play in the broader energy and emissions reduction debate.  Natural gas is the perfect complement to the growing use of renewables and will continue to be so for decades to come.”

For Appea though, Morrison has more work to do in other states that have blocked upstream production: "In particular, Victoria’s unscientific, politically-motivated bans on onshore gas development must end.”

On January 29, Morrison said that gas would be essential to coal-reliant Australia's energy transition. The deal follows tense relations between the two politicians as fires have swept uncontrolled through the state.