RBC hosted Origin Energy supply boss Greg Jarvis, AGL Energy chief economist Dr Tim Nelson and Frontier Economics managing director Danny Price on an Australian energy markets panel.
While the headlines of recent weeks have proclaimed an east coast energy crisis, in part as spare molecules of gas are hoovered up for export via Gladstone, the panellists appeared to be unified in their views that there was no gas crisis and the market is functioning as it should.
But that is not the view of Perth-based independent analyst Peter Strachan, who says Australia needs to drastic action to protect the economy.
Noting the east coast gas price has jumped from $4.50-$5 per gigajoule to as high as $20/GJ in extreme market conditions, Strachan blamed the crisis on the Commonwealth and the Queensland LNG companies for developing the CSG-LNG industry "without proper consideration of the underlying gas supply capabilities of their proponents or the gas reserves required to support each project and with zero regard to Australia's competitive position with respect to this most basic of factor inputs into any economy".
Yet the RBC panel heard that gas prices are simply rising to reflect both the internationalisation of domestic pricing, marking an end to the era of artificially cheap gas in Australia.
The panellists said the market was attempting to respond by providing a "powerful investment signal and an opportunity for gas developers", but was coming up against constraints on the exploration that would otherwise find and develop new sources of gas - as was the case more than a decade ago in the US.
In the mid-2000s the US energy sector responded to forecasts of a chronic gas shortage by building LNG import terminals, something that even attracted Woodside Petroleum, and by trialling new fraccing technologies in gas shale reservoirs.
The fraccers won, and now the US is on a path to being a net gas exporter.
RBC's conference heard something similar could happen in Australia is the shackles were taken off exploration.
"Artificial supply constraints such as fraccing moratoriums are clouding the investment signal for developers," RBC said.
All panellists reiterated their calls for a consistent science based approach to addressing community and landowner concerns over onshore gas development and better coordination between state and federal authorities on approvals.
The panellists said recent "concessions" made by certain gas producers in Canberra recently were coming regardless of government demands and were "commercially rational".
"The squeeze on gas currently is in part related to APLNG's accelerating output as it seeks to get through its second lenders test. After this test, that project has more optionality to direct gas back to the domestic market," RBC said.
APLNG is already one of the largest domestic gas suppliers on the east coast.
The panel also discussed the recent government interventions in the market by Canberra and South Australia.
Yet while the RBC panellists were confident the market finding a balance, Strachan quoted MacroBusiness as saying that in effect the entire east coast economy was being taxed, and the proceeds given to the likes of Santos, Origin and Shell as they "take the gas for free".
In a recent report, Strachan said the loss of Australian industry's long standing natural advantage of low cost energy was causing significant damage to the nation's competitive position and will likely see the closure and relocation of many energy intensive industries into lower cost operating environments.
He criticised the Commonwealth for ignoring repeated warnings of a shortage of uncontracted domestic gas supply, and the LNG producers for failing to meet their production targets of 1400PJpa of CSG to feed the plants, seeing them, primarily Santos, competing for gas in the domestic market.
"StockAnalysis warned that the domestic gas price would need to rise to equal the net-back price for export LNG once all the CSG to LNG projects were fully commissioned otherwise gas would be directed towards the LNG makers," Strachan said.
"At $US13/GJ for LNG in Asia, that net-back price might have been $A10.5/GJ.
"However, the situation is now worse! Even though the delivered LNG price has now fallen to around $US7/GJ or $A9.30/GJ, the CSG-LNG plants are so short of gas supply that they are competing for gas in the domestic market, just to run their plants efficiently and meet contract commitments."
However, Blue Energy boss John Phillips told Energy News recently that gas buyers need to wear some of the blame, because they had failed to re-contract gas at lower prices when it was available, and they were now calling on government intervention to sort out the mess.
Strachan said while there are 2P reserves of 44,000PJ in the east coast, enough to meet forecasts, there was variability y in deliverability and certainty, and given many of the undeveloped fields are expected to fall short of expectations, less gas may be delivered.
The economist says the concept of a gas reservation policy, something that has the backing of Federal Labor and various Liberal oppositions around the nation, but no support in Queensland from either party.
A recent Guardian Essential poll shows 75% of the survey supports a reservation policy, with the strongest support registered among Coalition voters.
Strachan also recommended the concept of the PNG gas pipeline be revisited, which could make cheap gas available within 4-5 years.
Most controversially, Strachan called for the shutdown of half the Gladstone LNG trains.
"These projects could make more money in the current market by selling gas into the domestic market and they could meet contractual LNG sales by trading in the spot market, where prices are currently lower than contract pricing," he said.
He is also backing LNG imports into the east coast markets, and a lifting of exploration and fraccing moratoriums.
But, in the meantime, he said buyers will need to get used to $12/GJ gas.
