Again talking up his flagged transcontinental pipeline idea from Western Australia to the east coast on Sky News' The Bolt Report yesterday, former state premier Colin Barnett said the $5 billion price tag was "not that much in terms of major infrastructure projects".
"It would be a $5 billion waste of taxpayer funds. Would be much cheaper to import LNG on east coast," Wood Mackenzie's Perth-based lead Australasia oil and gas analyst Saul Kavonic tweeted in reply to The Bolt Report Tweeting the Barnett footage.
Kavonic's comments are intriguing given he believes diverting gas from Queensland's LNG megaprojects is an even more economical solution than LNG imports.
Wood Mackenzie forecasts a tight gas supply on the east coast, with the risk of a shortfall as early as 2019.
While Barnett argued a transcontinental pipeline was a necessary step given electricity price rises of more than 40%, new WA mines minister Bill Johnston said piping gas from west to east would only lead to more gas being exported from Queensland.
"It still doesn't solve the problem if you still don't have a domestic gas reservation plan. You need to make sure your country has the energy security it needs," Johnston told The Australian recently.
Consultancy Petrosedex co-founder Keith Skipper, currently a director of early-stage WA gas and liquids explorer UIL Energy, wonders where the gas to solve the east coast gas crisis will come from if CSG (via drilling bans in Victoria and New South Wales) and low-permeability tight gas are taken out of the equation.
"No matter what, it will not be cheap and the best the consumer may hope for is ‘import parity'," Skipper, who is also a director of US-focused Samson Oil & Gas, said.
"Even Santos stated several years ago it needed $6/GJ; [though] we might be able to import at $US7.50/GJ. It may be a question of price and affordability, and is also an issue of security of supply for gas - and power.
"I don't think that folks really appreciate the issues about "home grown" natural gas - this is a continent which lacks infrastructure and is not well endowed onshore."
Shale challenges
Skipper's comments were initially triggered by Energy News' resident analyst Slugcatcher's Monday column noting that that shareholders in Origin Energy, which has some of Australia's most advanced shale projects, initially gave its share price a boost following glowing news from a recent media site visit, then "gave it a kick downstairs".
The analyst suspected that Origin CEO Frank Calabria's comments that it was "early days" may have contributed to the price drop, as "economic viability is the absolutely critical test of whether a resource in the ground is worth anything at all".
"Investors, after an initial flurry of excitement, also seem to be asking the same question of Beetaloo. They do not doubt that there is gas in the ground, but after a brief period of consideration they're not certain that it will ever reach a customer," Slugcatcher said.
Skipper agreed that, rock issues aside, Australia's onshore basins have a "long way to go before we see the scale of hydraulic fracture stimulation seen in North America experimented with on our shores".
"At this very time, North American players in certain prolific basins, are pushing the length of laterals to in excess of 6000m, the volume of proppant to over 5000lbs per lateral foot (say 7.4 metric tonnes per metre) and total well proppant volumes of, say, 25,000t," Skipper said.
"It is not unusual to speak of ‘unit trains per wellbore' with a unit train consisting of over 100 ‘hopper cars' each containing 100t. It does not come cheap.
"Not only do we have basins with ‘tough' and perhaps incomparable geology (including geomechanical properties) but we also have to deal with remoteness from, and limited, infrastructure let alone poor public policy and perceptions."
Skipper also agrees that Origin has plenty of work and expense ahead as it conducts an exploration venture in the Beetaloo before one sees a commercial outcome.
Origin's work in unlocking the Northern Territory's shale gas - currently inhibited by the fraccing ban - is needed for Jemena to extend the Northern Gas Pipeline to help address the east coast problem.
