PERTH (miningweekly.com) – The New South Wales Senate Committee on the supply and cost of gas and liquid fuels has proposed the introduction of an Australia-wide gas reservation policy to assist in containing gas prices and to ensure security of supply.

The committee, which published its final report on Wednesday, added that the development of New South Wales’ coal seam gas (CSG) reserve alone would not address the challenges facing the market.

The report also recommended that the New South Wales government hold back on the expansion of the CSG industry until all the recommendations previously made by the chief scientist and engineer were implemented in full.

In 2014, chief scientist and engineer Mary O’Kane made a number of recommendations around the state’s CSG industry, which included designating areas for CSG extraction, ensuring high standards of engineering and professionalism in CSG companies, creating a state environment data repository, comprehensive monitoring of CSG operations with ongoing scrutiny of collected data, a well-trained and certified workforce and applying new technologies as measures to corral the CSG industry.

In November last year, the New South Wales government announced new plans for the CSG industry in the state, revealing that the Office of Coal Seam Gas (OCSG) would be responsible for the assessment of all CSG exploration applications.

The state government made plans to reset the entire system for petroleum exploration licences, with the government now discerning which areas would be released for exploration, and to whom.

Under the new process, a company proposing gas exploration must prepare a review of environmental factors, which examines and responds to all potential impacts of the proposal.

If the OCSG considered that the impacts of a proposal were significant then an environmental-impact statement (EIS) would have to be prepared for public exhibition.

Greens group Lock the Gate Alliance has welcomed Wednesday’s Parliamentary report into the supply and cost of gas, reading that it had effectively called for a halt to CSG drilling in the state.

The alliance pointed out that contrary to industry scare campaigns, the committee confirmed that the CSG mining and export industry in Queensland had caused the recent gas price hikes, and that no amount of CSG drilling in New South Wales would reduce prices.

Lock the Gate national coordinator Phil Laird said the government had to take these recommendations to heart and should act to put the Gloucester and Narrabri projects on hold before any more damage was done.

“After waiting so long to hear the chief scientist’s recommendations, we cannot wait any longer for them to be implemented.  The New South Wales Gas Plan is now in tatters, and must be completely rewritten off the back of this report.

“We are calling for Mike Baird to immediately announce a completely new approach which puts CSG mining on hold in New South Wales.”

However, the Australian Petroleum Production & Exploration Association (Appea) criticised the report, saying it offered no sensible or viable solution to impending gas challenges, but rather suggested that New South Wales’ future energy security could be found in asking other states to forego economic opportunity and underwrite New South Wales inaction.

“A do-nothing approach that calls on other states to fix New South Wales’ gas supply woes is clearly not a sustainable or sensible option,” said Appea CEO for Eastern Australia Paul Fennelly.

“There are Australian companies operating in New South Wales, informed by science and the latest technological innovations, standing ready, willing and able to develop gas resources for the state’s 1.3-million gas users.

“That’s the answer to securing the state’s gas supply – not politically motivated recommendations released prior to a state election.”

Appea pointed out that the chief scientists’ report indicated that the technical challenges and risks posed by the industry could be safely managed, and that the natural gas industry was mature and well equipped to manage extraction and related technologies through its high engineering standards and level of professionalism.

Fennelly noted that New South Wales possesses enough gas resources to meet current demand for around 500 years.

“Yet at a time when New South Wales gas prices are rising by more than 10% per annum, the state continues to import 95% cent of its supply,” he added.

Fennelly warned that if gas reserves were not developed, there was a real risk that New South Wales would face significant energy supply and cost challenges within the next few years.

Meanwhile, he noted that the Senate Committee’s call for a national gas reservation policy suggested that some committee members were “living in a fool’s paradise”.

“Not only does New South Wales have no gas under development to reserve, the notion of ‘reservation’ at the national level is widely criticised by many governments, gas producers, businesses and big manufacturers.”

Last year, the Council of Australian Governments Energy Council dismissed possible gas market interventions via a ‘gas reservation’ policy or ‘national interest test’, which Appea said was a clear recognition such calls present no viable way to securing gas supply and putting downward pressure on gas prices.