NSW Parliamentary Inquiry releases report on cost and supply of gas

In late 2014 a NSW parliamentary inquiry was established to investigate the supply and cost of gas and liquid fuels in the state.  Today the Inquiry has released its final report, which makes  recommendations in relation to improving transparency and openness in the eastern Australian and NSW gas markets; implementing the recommendations of the NSW Chief Scientist before expanding the coal seam gas industry; and working with the other State and Commonwealth governments to pursue an Australia-wide domestic gas reservation policy.

In particular, AGL welcomes the recognition in the report that “It is clear that the NSW government must take whatever reasonable actions consistent with a market economy it can to protect households and businesses from potential shortages or price shocks, particularly by encouraging increases in supply.” AGL research has found that because NSW is almost entirely reliant on interstate gas, it is the region most vulnerable to demand shocks during rapid market transformations occurring as a result of LNG project developments in Queensland.   Developing new gas supplies in NSW, for use in NSW, will enhance energy security and will deliver economic benefits for the state by placing downward pressure on gas prices for homes and businesses.  AGL believes that with the appropriate scientifically based regulatory frameworks in place, coal seam gas can be safely extracted at projects like our Camden and Gloucester projects; this view is supported by the NSW Chief Scientist and in the NSW Government’s Gas Plan.

Unfortunately, a gas reservation policy is unlikely to be effective because in the short term it will not deliver additional supplies into a market with a very tight supply/demand balance.

This article also appears on Your Say AGL.

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