Gas reservation plan ‘on the table’ to fix NSW’s energy crisis

The NSW Premier has committed to look into a gas reservation policy for the state as suggested by Labor after the government copped criticism for stalling major energy projects for years.

Premier Dominic Perrottet says a gas reservation policy to keep domestic supplies here should be “on the table”.

His comments come after Opposition leader Chris Minns backed a plan that would force exporters to keep certain amounts of gas reserves for the Australian market.

“I will seek advice on the best policy,” Mr Perrottet said.

“We need to ensure that we have consistent gas supply now and into the future, and all options to be on the table.”

Mr Perrottet said it’s “incredibly important” that australia becomes less reliant on imports for our energy supply.

NSW Premier Dominic Perrottet. Picture: Gaye Gerard.

“I think it’s incredibly important that nations become more self sufficient and less reliant on other countries. And I think we need to make sure that we preserve our own our own energy supplies here in our state,” he said.

He said that could be achieved by investing in new generation here.

It comes as NSW faces an energy crisis after years of gas projects being stalled, delayed and rejected by successive state governments, causing unions and producers to demand the state break the energy logjam and for officials like Treasurer Matt Kean to stop talking down gas.

Meanwhile Labor Leader Chris Minns has called for rules to ensure future gas projects keep gas here.

Mr Minns called on the state government to develop, with the eastern states, a “Gas Reservation framework” which would “ensure future gas projects produce a domestic economic benefit.

“A reservation policy would ensure affordable supply for local manufacturers and families to use,” he told The Daily Telegraph.

NSW Labor leader Chris Minns has proposed a “gas reservation framework” for the east. Picture: Supplied

“While Western Australia requires exporters to reserve a certain amount of their gas for the local market, the eastern states do not.

“Commitments from gas exporters to sell domestically is a gesture of good faith, but the government should take steps to ensure compliance.”

“The current crisis shows there’s a need for better energy policy when it comes to domestic gas supply.”

On Wednesday Mr Kean said he told energy operator Santos to “crack on” with the approved Narrabri gas project as the state stares down the barrel at an energy crisis.

Mr Kean also said he was an “enthusiastic supporter” of the Narrabri project but there was nothing more the government could do to fast track the project — which is due to go online in 2025.

Treasurer and Minister for Energy Matt Kean is under pressure to find a resolution to the state’s energy crisis. Picture: NCA Newswire/ Gaye Gerard

“This has been through a rigorous assessment process, it’s now up to Santos to crack on with the job. Get that gas out and get it into homes and businesses in NSW,” he said.

Mr Kean confirmed that he has spoken to energy operators to bring back coal-fired power stations that have been offline.

“We need to get our coal-fired power stations back cranking up. I’ve spoken to all the CEOs of the energy companies and made my views very clear,” he said.

When asked if the energy crisis, exacerbated by the war in Europe, would prompt the government to approve more gas projects, Mr Kean said the government had approved Narrabri and Port Kembla.

“The government will obviously look at all options to look at energy security here in NSW … the government has approved the Narrabri gas project which will more than meet NSW’s needs for gas now and into the future,” he said.

The Santos Narrabri Gas project, which the NSW Energy Minister says can’t be further fast-tracked. Picture: Nathan Edwards

“In addition to that, we have approved the Port Kembla gas terminal.”

However Santos officials said more red tape remained to get Narrabri flowing.

“We would call on governments to help support the final steps in those approval processes to get (Narrabri) up and running,” Santos CEO Kevin Gallagher told Sky News Wednesday.

“Santos owns that project 100% and would commit 100% of that gas to the domestic market.”

As well, an analysis of Mr Kean’s previous statements finds that the Treasurer has frequently talked down the development of gas projects in the state.

In 2020, as energy minister, Mr Kean told the youth wing of the Coalition for Conservation that “the business case for gas is on the clock.”

The following year, he said of the Morrison government’s investment in the Kurri Kurri gas plant, “if the federal government wants to invest in the industries of the past, good luck to them.”

Because renewable power is not baseload it must be supplemented by technologies such as natural gas “peaking” plants such as the one at Kurri Kurri or be backed up by batteries.

A 2019 study commissioned by Industry Super Australia found that it would cost $6.5 trillion to build enough battery storage to keep the nation powered for one and a half days.

Daniel Walton, national secretary of the Australian Workers Union, told The Daily Telegraph more needed to be done.

Snowy Hydro Colongra Gas fired power station. Picture: Adam Yip

“The minister was on the record having said gas does not have a significant role to play in the future but tell that to so many manufacturing businesses around the state that are beyond breaking point,” Mr Walton said.

Pointing to businesses that have been forced to shut down during peak hours or pay as much as $100,000 a day for gas, Mr Walton said, “we’ve moved beyond the hypothetical and now see businesses making minute by minute decisions on how to survive.”

“What exactly is the state doing to fast track the development of (the Narrabri Gas Project),” he asked.

The Narrabri project, which has the potential to provide half of NSW’s gas needs, is only one project that has been slowed or cancelled by the NSW government over the past decade.

Under the leadership of then-Premier Mike Baird, in 2015 Resources Minister Anthony Roberts cancelled gas exploration licenses in the Upper Hunter and northern NSW around Gloucester.

At the time, AGL was still attempting to develop its Gloucester Gas Project, which according to company documents was originally planned to go on line in 2016 and which engineers claimed could bring 423 petajoules of “proved and provable” gas reserves into the NSW network over its lifetime.

One petajoule of energy is enough to provide the energy used by 19,000 homes in a year, according to the Department of Energy.

Prior to that, and under heavy pressure from certain segments of the media particularly broadcaster Alan Jones, in 2013 the Barry O’Farrell government put a moratorium on coal seam gas exploration in anticipation of a report by Chief Scientist Mary O’Kane.

Then-NSW Premier Barry O'Farrell put a moratorium on coal seam gas in 2013. Picture: Bradley Hunter

After her report, which found that the risks of coal seam gas wells could be managed, was issued in 2014 Professor O’Kane publicly considered taking legal action against Mr Jones after he suggested it had been influenced by the resources industry.

“We have to approve more exploration now, so long as we have a reservation policy in place to make sure the benefits go to the great people of NSW before they go overseas,” Mr Walton said.

“Using gas to generate electricity is extremely expensive and that’s one of the problems we have now,” Mr Kean told The Daily Telegraph.

“Our high prices are as a direct result of Vladimir Putin’s illegal invasion of the Ukraine, which is putting huge pressure on global gas, coal and oil prices.

“My focus is on putting downward pressure on energy bills, that’s why over the short term, our rebates are currently available to about a third of NSW households.

“Over the long term, the best way to avoid the impacts of global energy shocks is get as much energy as possible from the wind and the sun, which is what our renewable energy zones, backed up by long-duration storage like pumped hydro, will do.”