PERTH (miningweekly.com) – Oil and gas major Santos on Thursday said that the Australian East Coast was not faced with a gas crisis, but rather a policy crisis.
Speaking at the company’s annual general meeting on Thursday, chairperson Peter Coates told shareholders that there was an “absolute shortage of uniform government recognition, commitment and support for ongoing orderly development of adequate supply to the East Coast domestic market”.
Coates was responding to a recent federal government decision to impose export restrictions on gas to ensure sufficient domestic supply.
The export controls will be based on advice from the market operator and regulator.
If an exporter is not a net contributor to the domestic market, meaning, it draws more from the market than it puts in, the exporter will be required to outline how it intends to fill the shortfall of domestic gas.
Coates on Thursday said that access to low-cost conventional gas reserves for the East Coast market, particularly from the Cooper basin, had been declining for some time, adding that there were physical limits in terms of pipeline and hub capacity that limited access to Bass Strait reserves for both Queensland and New South Wales.
“In short, government and regulators need to understand that the reliability and availability of adequate gas reserves for the East Coast market into the future depends absolutely on increased access to new unconventional gas reserves.”
Coates pointed out that not one of the three liquefied natural gas (LNG) projects in Queensland would have been sanctioned on the basis of domestic demand and pricing alone, adding that without access to export opportunities, there was no viable commercial case for any of the Queensland coal seam gas fields or pipelines to be developed.
“In simple terms, without the LNG projects, the gas would still be sitting in the ground, unavailable to the domestic market, at any viable price for its users. But their development, particularly our Gladstone LNG project, provided the basis in terms of scale, experience and capability for ongoing development of an unconventional gas industry which could underpin security of East Coast gas supply for decades to come.”