This piece originally appeared as a Letter to the Editor of the Narrabri Courier on 28 September 2017
The NSW Government has long understood the importance of the proposed natural gas project at Narrabri, including it in its development category for ‘State significant’ projects.
Now the Commonwealth has cottoned on.
This week Prime Minister Malcolm Turnbull identified the Narrabri project as an essential element of addressing the looming East Coast gas-supply crunch.
“We strongly encourage the NSW Government to approve the development of the Narrabri Gas Project,” Mr Turnbull said.
It is an uncommon step for a Prime Minister to dive into an issue of State development, requiring State planning and environmental approval.
In this case, the PM even went to the extent of detailing his interest — an estimated 58 petajoules of gas per year.
This is important for NSW and Victoria particularly, because the manufacturing sector is crying out for gas – to ensure supply and keep a lid on prices. Electricity consumers (industrial, agricultural and consumer) ought to be interested too, because more gas is going to be needed to fill the gap as coal-fired power stations — like Liddell in the Hunter Valley – reduce output or close down altogether.
This has already been evident in Victoria, where electricity prices have jumped markedly in the wake of the closure of the Hazelwood power station.
Environmental activists like those seen dropping in from the coast to Narrabri in the past year try to say that wind and solar farms are cheaper and can deliver power “24/7”. They are wrong on both counts.
Wind farms don’t work when the wind is not blowing, or when it is blowing too hard. Sunshine is not available 24/7, or 7 days a week. The biggest batteries in the world last only two or three hours.
The chairman of the Australian Consumer and Competition Commission, Rod Sims, belled the cat last week, when he said renewable energy subsidies were responsible for 16% of our power bills.
We are headed to a future with much more renewable energy – and that is a good thing. But we need consistent baseload power to run business and industry and we need flexible gas-fired back-up to renewables to make the power genuinely available 24/7.
That is why the PM said the Narrabri project was essential, not just for business and industrial purposes, but for the nation’s energy needs more broadly.
“The sooner that is brought online, that is critical to the energy security of Australia,” he said.
Mr Turnbull also showed he was up-to-date on the NSW gas supply situation, noting NSW ‘…imports 95% of the gas it uses”.
The other 5% comes from a facility just to the south-west of Sydney – and its owner, AGL, has flagged its intent to close that facility in five years – roughly the same timeline it has identified for the shutdown of the Liddell power station.
However, Camden will lose production progressively, so the NSW gas supply situation is going to get tighter and tighter in the years ahead.
This comes at the same time as a supply crunch on the East Coast which has prompted the Commonwealth to flag the possibility of interfering in existing contracts for liquefied natural gas (LNG) exports from Queensland.
It is considering this almost unprecedented step so that gas planned for export can be redirected to domestic markets – primarily in NSW and Victoria. This robbing Peter to pay Paul approach is designed to ensure there is enough supply for the big gas customers in NSW and Victoria, who need certainty of supply.
Needless to say it is not a popular move among the exporters who have spent over $80 billion creating the new Queensland LNG export industry – and nor is it popular with our trading partners or the Queensland Government, which stands to lose royalties as a result.
Surely it would be a better, more efficient solution to produce the gas locally in NSW – and provide a substantial boost to Narrabri and the regional economy. The PM seems to think so.
Director, Energy Resource Information Centre