OPERATIONS

Budget comes with bells on

APPEA welcomes efforts to boost gas production, despite interventionist concerns.

 Josh Frydenberg.

Josh Frydenberg.

The federal government's Budget, which is aimed at returning to surplus in 2020/21, found room for a $265 million energy package, including a $28.7 million East Coast Development Program to help bring new gas supply projects forward.
 
The program is similar to South Australia's recent PACE grants to secure future gas resource for Australia, from which Beach Energy and Santos benefited.
 
"The only genuine, lasting solution to the tight east coast gas market is more supply.  More supply will boost liquidity and competition in the market, putting downward pressure on prices," Australian Petroleum Production and Exploration Association CEO Dr Malcolm Roberts said.
 
"We have ample resources in Australia to supply domestic and export markets - we should be using those resources."
 
The Budget also allocated a $19.6 million to the Gas Market Reform Group to accelerate the COAG Energy Council reforms to improve gas market efficiency and transparency.
 
Part of those funds will also go towards the Australian Competition and Consumer Commission, which will conduct regular market monitoring and reporting on the east coast gas market.
 
APPEA said the ACCC's work was "vital".  
 
"APPEA supports monitoring of the market across the industry value chain," Dr Roberts said, in keen anticipation of seeing the first ACCC report later this year.
 
The Budget also committed $2 million to the Australian Energy Market Operator to improve publication of real time assessment of gas flows and market analysis, to make it easier for the market operator, businesses and investors to make informed decisions about gas market operations.
 
The government will also give $30.4 million in new funding to support bioregional assessments, which APPEA saw as a move to promote the "vital role of independent science in the loud but often badly informed debate about the onshore gas industry".
 
The studies will assess any potential impacts on waterways and aquifers from unconventional gas projects, and over the next three years the expanded program will examine new gas reserves and provide independent scientific advice to governments, landowners and the community, business and investors on future secure and reliable gas supply.
 
"Minister for the Environment and Energy Josh Frydenberg should be commended for "ensuring local communities have access to genuine information - not alternative facts - about environmental issues," Dr Roberts said.
 
The Commonwealth will also fund a $5.2 million study of the potential national interest benefits of new pipelines from the Northern Territory and Western Australia to Moomba, to help feed the east coast. 
 
"Provided the business cases for new infrastructure stack up, APPEA welcomes more interconnection and further steps towards a larger, more integrated national market," Dr Roberts said.
 
No mention was made of any Northern Infrastructure Fund cash going towards building pipeline infrastructure into the Bowen and Galilee basins, as requested by the Queensland government, to help solve the east coast energy crisis.
 
The government is clearly backing gas from central Australia, rather than from the north, which would appear to heed the advice of the Australian Pipelines and Gas Association, which warned against the Commonwealth funding infrastructure without production in place or even planned.
 

Bigger picture

 
The budget also reaffirmed its commitment to invest in expanding the Snowy Hydro project and to potentially buy a greater share or even obtain outright ownership in the development from New South Wales and Victoria, which currently own 58% and 29% respectively. 
 
The government promised to retain Snowy Hydro in public ownership, and is also looking at further hydro-electricity and pumped storage opportunities in Tasmania, South Australia and Queensland.
 
Engineering firm Aurecon's managing director, energy, resources and manufacturing Dr Alex Wonhas saw the 2017-2018 Federal Budget as foreshadowing investments in other new generation such as a solar thermal plant at Port Augusta, transmission and storage infrastructure, as well as a $90 million energy security plan. 
 
The Turnbull government will make available up to $110 million to build a solar thermal plant at Port Augusta and separately provide up to $36.6 million over two years from 2017-18 to target investment in energy infrastructure in SA under a bilateral asset recycling agreement.
 
"It is true that the areas identified by government are likely to require future investment. Further detail regarding the energy security plan will be eagerly anticipated by the industry," Dr Wonhas said.
 
"In order to improve its energy security, Australia will need to find cost effective ways to store or transport energy from where and when it is produced to where and when it is needed as energy supply will become increasingly variable through the expected uptake of renewable energy. 
 
"The growth of wind and solar will become less and less dependent on subsidies as these technologies have now reached the tipping point of becoming cost competitive with new-built conventional power stations." 
 
 

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