Shipping gas from coast to coast could solve shortfall

Marion Rae |

Gas is more than an insurance policy for reliable power, the industry insists, as executives prepare to ship gas from coast to coast for homes and industry.

Shortfalls are getting closer and closer, particularly for Australia’s southern states, Origin Energy boss Frank Calabria told reporters at an industry conference in Perth.

“If there’s not further supply into those markets, you’ve got two choices – you’ve got to transport gas from Queensland or you’re going to have an import terminal,” he said.

Origin Energy CEO Frank Calabria
Frank Calabria says the future gas strategy recognises the need for gas-fired electricity. (Richard Wainwright/AAP PHOTOS)

LNG import terminals in NSW or Victoria could store and supply homes and industry – taking gas from Western Australia, Queensland or foreign markets – instead of sending it through eastern pipelines.

Woodside Energy boss Meg O’Neill said she was keen to work with Viva Energy on a proposed LNG re-gasification terminal at the Geelong refinery to support the national electricity market’s transition to lower-carbon energy.

“Since we concluded the merger with BHP Petroleum we now have a significant position in the east coast gas market. We can see that is a market that needs more gas,” she said.

But the idea of permanent price intervention by governments “is a sure way to drive gas out of the system and make the problem worse,” she warned.

Ms O’Neill said meeting Victoria’s seasonal demand with LNG could be a “quite elegant” solution, with the Bass Strait fields declining.

“The challenge, as with many other things, is the environmental approvals,” she said.

A high-profile target of personal attacks by environmentalists, she said young people don’t understand gas is part of a net-zero economy.

Many have an emotional response that “solar and wind are good and oil and gas are bad” for climate change but the energy system is complex, Ms O’Neill said.

“If you’re talking to your teenager about that, their eyes glaze over,” she said.

Woodside Energy CEO Meg O'Neill
Woodside chief Meg O’Neill says young people don’t understand gas is part of a net-zero economy. (Richard Wainwright/AAP PHOTOS)

Gas-fired electricity, mining and manufacturing account for most gas used in the nation but there are vast differences that leave different groups and regions vulnerable – on price and supply.

Households in Victoria have the highest gas dependence in the country, with almost 90 per cent on gas appliances, while in Western Australia the domestic gas supply is almost entirely consumed by industry.

“Electrification of vehicles, homes and industry will take place … but we are going to be closing coal over time and therefore gas will provide the backup,” Mr Calabria said.

Rather than exclusively building renewable energy, the federal capacity investment scheme must include include taxpayer support for fast-start gas plants to meet periods of peak demand, he said.

Mr Calabria said the future gas strategy acknowledged the need for gas-fired electricity as coal comes out of the system and he expected the need to become more pressing.

In the meantime, talks with the NSW government continue over extending the life of Origin’s ageing coal-fired power plant Eraring as an insurance policy against blackouts.

He said transmission approvals continued to be very time consuming, and were years away for some renewable projects.