The Narrabri gas project, 100% of which is dedicated to the domestic gas market, is now desperately needed.
Between 2009 and 2012, we invested approximately $300 billion in seven new LNG projects – investments that have seen production increase nearly 170% in the decade to 2021. Tens of thousands of jobs have been created and our investment in LNG has supported Australia’s domestic development. also security of gas supply. Without this investment in LNG, most of Australia’s gas resources would never have been developed because Australia’s domestic market is simply not large enough to have supported the scale of investment needed to bring these resources to the market.
Since 2012, however, only two new LNG projects have been announced – Santos’ Barossa gas project off the Northern Territory which will fill Darwin LNG, and Woodside’s Scarborough gas project off Western Australia which will support Pluto Train. 2 and will fill Pluto Train 1.
Given that China, Korea, Taiwan, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Bangladesh and India will all consume more LNG in 2050 than they did in 2020 , Australia has a huge opportunity to continue supplying LNG to Asia for the next 30 years or more.
We are also transforming our LNG experience into a cleaner energy future that includes carbon capture and storage (CCS), hydrogen production, energy efficiency and integration with renewables. We’re not just aiming for net zero by 2050, we’re already building the plans to get there.
Last year, McKinsey produced a report on decarbonization options for our industry. He found that the oil and gas industry had a competitive advantage in providing wind, solar, CCS and, of course, hydrogen. The factors that give us this advantage are similar to those that drove the LNG industry: geology and growing demand.
Additionally, the lessons of the past 40 years have given us unparalleled operational familiarity, infrastructure access, supply chain relationships and project expertise.
And decarbonization is in demand right now. At the World Gas Conference, the discussions are not about how the industry could decarbonise. They are about what we are already doing.
Australian LNG has the potential to reduce emissions in LNG importing countries by around 166 million tonnes of carbon dioxide each year, replace higher emission fuels. To put that into perspective, that equates to more than a third of Australia’s total annual greenhouse gas emissions.
We are already building renewable energy projects across the country, while ensuring there is dispatchable power for the power grid when the wind isn’t blowing and the sun isn’t shining.
Our sector is one of the largest investors in new fuels and emission reduction technologies. In recent years, we have announced more than $6 billion in these projects, from CCS to hydrogen to energy efficiency.
Australia can be at the forefront of a new wave of technology, a world leader in reducing emissions.
Unaware of the reality of global energy markets where demand for LNG in our region will double by 2050, our opponents are still pursuing a complete phase-out of fossil fuels, which is simply unachievable. Minority calls to end oil and gas projects are calls to return to burning coal and wood in Asia, to make integrating renewables into the grid more expensive and to stop billions in funding committed to cleaner energy.
They also ignore other very real priorities for the Australian people: the cost of living, national security and our ability to make things – the essentials that underpin modern life such as fertilisers, packaging, l medical equipment and polymers that still supply 60% of the world’s clothing fibers.
The project moratoriums and bans of the mid-2000s are making a comeback – as are the effects of market intervention.
This week we saw the price shocks that occur when investing in supply does not match demand. Until the end of April, domestic gas customers on the east coast were paying about a third of the net price of LNG, but outages at coal-fired power plants in May pushed up demand amid a tight supply situation, and this has had repercussions on rising gas and electricity prices.
Ironically, a last resort event retailer in New South Wales this week pushed the gas market there into administration, sending a market that had effectively matched supply to demand until the day of the intervention, in turmoil.
This is a state that imports more than 95% of its gas from other states and has refused to support investments in new gas supplies for most of the past decade.
The Narrabri gas project100% of which is dedicated to the internal gas market, is now desperately needed.
In other jurisdictions such as Victoria, political uncertainty is jeopardizing investment and supply – just as we need it. The many fingers of regulation – and those willing to use it as a business or philosophical tool – could cost us all dearly.
While domestic prices are still relatively low compared to those paid internationally, we simply need to ensure that new supplies are online to support continued energy security, maximize our international advantage, and meet domestic needs.
Now is the time for us to work together to ensure that gas reaches our customers and that regulation facilitates, rather than stifles, a functioning market.
We must also seize the opportunity to reduce emissions and seize our competitive advantage, recognizing the critical role of cleaner gas and energy projects such as CCS and hydrogen.
Many WGC delegates in Daegu, some no doubt wondering where they will get reliable and affordable gas in the future, would envy Australia’s position at this critical moment in history.
They don’t have the competitive advantage we have in energy resources and carbon storage – an opportunity we can’t waste.
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