The EUAA sets the context for supply concerns up front:
‘We believe the east-cost gas market, already facing significant price increases, will be facing a tipping point within the next 12-18 months with many commercial and industrial gas users facing an uncertain future'.1
Five solutions have been proposed by the EUAA to tackle issues including lowering consumer prices, increasing domestic supply and retail competition, encouraging new investment, and managing investor and sovereign risk. The options proposed fall into five broad groups:
- Immediate actions
- Maintaining the status quo
- Accelerated regulatory and market development
- Establishment of a Commonwealth Gas Company
- Domestic gas reservation.
Of particular note, one of their recommendations is the establishment of a government owned gas company which ‘could also include the Commonwealth supporting an FSRU [floating storage and regasification unit] for the purpose of transferring cheap, plentiful gas from the North West Shelf (NWS), to feed proposed import terminals in Victoria and New South Wales'.2
What’s AGL’s view?
Until large scale energy storage technology matures, gas is a critical part of the transition to a low carbon future; without it an orderly transition to a modern, clean and reliable energy supply is a lot more difficult because we need peaking gas generation to supplement wind and solar.
In searching for a solution, it became clear that importing gas, while counterintuitive given Australia’s abundance of natural resources, was a cost effective way to bring increased gas supply to the Southern markets within the timeframe required.
Consequently, AGL has proposed the Gas Import Jetty Project at Crib Point that will source LNG at competitive prices from Australian and international suppliers for our gas customers in south-eastern Australia.
The gas would be transported on liquified natural gas (LNG) ships from LNG suppliers, both in Australia and overseas, transferred to another ship (the Floating Storage and Regasification Unit or FSRU) and converted from liquid back into gas on the FSRU and then piped into the existing transportation network, delivered to our customers.
The FSRU that stores the liquid gas would be moored at the existing jetty at Crib Point that has a naturally occurring deep water channel and requires minimal upgrades
The current outlook suggests that shipping LNG to south-eastern Australia will provide reliable, long-term certainty for our customers and the market.
AGL is currently participating in the Victorian Government’s independent environmental review process, called for by the local community, to thoroughly assess the project.
We understand that there is significant community concern about the project, we will continue to provide opportunities for feedback and input into the project and the environmental assessments.
AGL believes that LNG imports into the South-Eastern Australian market provides a much-needed new source of supply to the market at a time when there is an increasing risk of shortages. More supply will lead to lower prices for customers and provide much needed flexibility in supply options.
The AGL Gas Import Jetty will provide capacity to the market to manage the needs of both:
- gas customers, especially when it gets cold in winter and everyone turns their heater on, and
- gas for peaking generation to top up supply when the wind doesn’t blow and the sun doesn’t shine.
Gas will continue to play a role in the energy supply mix and we want to ensure our customers have the opportunity to access gas when they need it.
1: Page 1: Energy Users Association of Australia’s National Gas Strategy Discussion Paper, 17/04/2019
2: Page 19 of 26, Energy Users Association of Australia’s National Gas Strategy Discussion Paper, 17/04/2019