NSW faces 21 days in winter without guaranteed gas, AGL warns
NSW faces three weeks’ worth of gas shortages in winter next year and the state government might have to invoke emergency powers to ration gas supplies, a leading energy company has warned.
AGL has used the drastic forecast to argue for government restrictions on coal seam gas development to be lifted, saying higher gas prices and “dire economic and social consequences” are looming.
But the state’s pricing regulator questioned whether increased gas extraction in NSW would ease local prices markedly.
Coal seam gas is one of the most polarising issues facing the government before the March election, amid fears over the impacts on water, land and air.
AGL is seeking to develop a coal seam gas project at Gloucester, where it plans to drill up to 300 wells.
In a submission to a NSW parliamentary inquiry on gas costs and supply, it said the export of natural gas from Queensland, starting this year, would triple demand in east coast gas markets and lead to higher prices.
AGL said new supply in NSW was required, or the state might face at least 21 days of unmet demand in winter in 2016.
If this occurred, the NSW government might be forced to use emergency powers “to direct network operators to curtail gas supply to some users”, AGL said, adding that industrial and commercial customers would probably face restrictions before households and emergency facilities.
The government recently announced plans to toughen coal seam gas regulation and take a more strategic, transparent approach to releasing land for gas exploration, in a bid to allay community concerns.
AGL said the regime should allow projects to proceed so gas demand can be met. It said decisions should be based on science, avoiding “politicisation of the issues” and influences that were not evidence-based.
Greens MP Jeremy Buckingham, deputy chairman of the inquiry, said governments had failed to insulate the manufacturing industry and consumers from the “crisis” created by Queensland’s gas exports, and fossil fuel alternatives should be developed.
The Independent Pricing and Regulatory Tribunal said the development of NSW coal seam gas reserves would still mean the state was a small supplier in the world gas market, at least in the short term. Other factors, such as international demand, would have a bigger impact on NSW gas prices, it said.
NSW Farmers agreed there was scant evidence that more NSW gas extraction would affect local supply and costs, and said protecting agricultural land should be the priority.
A spokesman for the Acting Resources Minister Troy Grant said there was no doubt NSW faced potential gas shortages and higher prices in the next five years, and the government had the power to “re-direct, reduce or restrict gas supplies according to priority”.