Queensland demands consultation over gas reservation

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The Federal Government has announced establishing a national gas reservation scheme, which would mean a portion of Australia’s gas supplies could be put aside for domestic use.

Resources Minister Matt Canavan said it would look to Western Australia’s model, which currently requires 15 per cent of gas produced to be reserved for domestic use, to develop the scheme.

Mr Canavan has urged states to get on board, but the Queensland Government has demanded consultation on federal plans to create a national gas reservation scheme.

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Queensland Energy Minister Dr Anthony Lynham said as the leading state on gas policy and supply for the east coast gas market, the government deserved to be part of any discussions about major market disruptions.

“We are deeply concerned that this meddling, which is not relevant to Queensland, may impact on our multi-billion dollar gas industry that Labor governments have built here from scratch,” Dr Lynham said.

“Queensland has long been doing the heavy lifting on gas policy and supply. 

“We supply about 25 per cent of the east coast gas market and have been leading policy innovation by setting aside land for gas for domestic buyers, and for manufacturers.

“More gas is the key to meeting demand, and that’s what our policies are driving.

“Our domestic supply policy allows for more gas to be brought to market, and more gas from more fields is the only long-term way to deal with supply issue and ultimately with price.

“The LNP Federal Government has never consulted Queensland on its domestic gas security mechanism and we remain in the dark on whatever is planned next.”

Since 2015 the Palaszczuk Government has released more than 39,000km2 of land for gas exploration, over a fifth of it guaranteeing the gas will be for Australian consumers.

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Blocks from these releases have been awarded to Senex Energy, Central Petroleum, Armour Energy, Chi Oil and Gas, Santos, Shell and APLNG.

Two projects have signed gas deals with local buyers.

Senex’s Project Atlas has contracts with CSR supporting 200 jobs, with O-I glass and with Orora to supply three manufacturing plants in Queensland.

And the APLNG-Armour Energy gas joint venture had signed gas deals with Orica for supply to their Yarwun explosives plant and packaging manufacturer Orora.

Senex’s and its construction partner in Project Atlas, Jemena, is also building a $140m pipeline and processing facility project that will connect Project Atlas to the Wallumbilla Gas Hub in south-west Queensland.

Trend petroleum exploration expenditure in Queensland was $59 million for the first quarter of 2019, an increase of 55 per cent compared the same period last year.

The Energy Users’ Association Australia (EUAA) has welcomed the federal government’s announcement, stating addressing the supply and price of gas along the east coast cannot come soon enough.

The EUAA says ordinarily it would be reluctant to support increasing government intervention in markets.

“However, in this case it sees there is no alternative due to the dire situation created through a combination of increasing LNG exports, state moratoria and a chronic lack of competition,” the EUAA said in a statement.

“Now that the Federal Government is taking action to address issues in gas markets, we hope that state governments can also be part of the solution. We would encourage them to consider putting in place a robust, scientific-based process to consider new gas projects as a replacement to moratoria,” EUAA CEO Andrew Richards said.

Victoria currently as a moratorium on gas exploration in the state.

“Particularly in Victoria where gas is used by most people for cooking and heating, and gas will also be needed to provide flexible generation to compliment increasing levels of renewable energy, it seems hypocritical to have a blanket ban on gas extraction of any kind, especially when we are facing so many challenges,” Mr Richards said.