By Nick Toscano
Energy giant Santos is urging the winner of the next federal election to help greenlight the controversial Narrabri coal seam gas project in NSW, arguing it remains the cheapest viable solution to plug the impending gas shortfall in NSW and Victoria.
The Adelaide-based oil and gas producer says its plan to drill up to 850 gas wells at Narrabri could deliver up to half of NSW’s natural gas needs. However, the project has run into years of delays amid legal appeals and objections from environmental activists, some landholders and the Gomeroi traditional owners, which fear Santos’s plans could inflict irreversible damage on their culture, lands and waters and worsen global warming.
Santos CEO Kevin Gallagher said time is running out to shore up new gas supplies.Credit: Elke Metizel
Santos managing director and CEO Kevin Gallagher on Wednesday said time was running out for governments to shore up enough new gas supplies to protect the millions of homes and businesses which still depend on the fuel from energy shortfalls and higher bills.
The Australian Energy Market Operator (AEMO) has been sounding the alarm over the speed and scale of depleting output from the giant gas fields in Bass Strait that have supplied the local market for decades.
Unless greater gas supplies are urgently made available to offset those declines, warns AEMO, homes and businesses in Victoria, NSW and South Australia are heading for a domestic gas shortage by 2028, or even sooner.
“I’d argue Narrabri is the answer,” Gallagher said.
“My request to both sides in this election, whoever comes out on top, is to sit down with the NSW state government and work out how they can get the Narrabri project approved and how they can cut through all the lawfare and all the obstacles that keep getting thrown in the way.”
More Australians are moving to replace their gas appliances with electric alternatives, which is driving down forecast demand levels for gas. But that shift is not happening fast enough to avert annual supply deficits, expected within as little as three years, according to the AEMO.
“If you bring in imported gas, you’ll get international prices.”
Santos chief executive Kevin Gallagher
As other states including Queensland and Western Australia are major producers of liquefied natural gas (LNG), Australian energy ministers agreed in December to develop a plan to kick-start imports of LNG into south-eastern Australia for the first time, from other states or overseas.
This included seeking advice on potentially underwriting the launch of one or more LNG terminals.
Gallagher said importing LNG would inevitably expose domestic consumers to global prices, unless government provides subsidies at a cost to the taxpayer. “If you bring in imported gas, you’ll get international prices,” he said.
His comments came as Santos told investors its full-year profit for 2024 had fallen 11 per cent to $US1.2 billion ($1.9 billion), missing analysts’ expectations, amid declines in the prices it earned for selling crude oil and LNG.
The company said it would pay a final dividend to US10¢ a share, unfranked, down from US17.6¢ a year earlier.
Also on Wednesday, Santos sounded an upbeat tone about the prospect of its carbon capture and storage site at Moomba in South Australia, saying its successful start last year had given the company greater confidence in its ability to stash greater volumes of emissions underground from customers across Australia and in Asia.
Carbon capture and storage, which traps emissions from polluting facilities such as power stations or factories and injects them into underground rock formations, has been one of the most contentious solutions in the fight to arrest climate change.
Supporters argue it is a critical tool to decarbonise the world and avoid the worst impacts of global warming, especially in parts of the economy that cannot easily switch to greener processes. Critics, meanwhile, dismiss the technology as too expensive and commercially unproven, and claim it is being used as a delaying tactic by the oil and gas industry to prolong the use of fossil fuels.
Market Forces, a climate-focused shareholder activism group, said Santos’ reliance on carbon capture and storage was a “smokescreen” for expanding gas production.
“Any emissions captured by Moomba are a drop in the ocean compared with the company’s current annual emissions,” Market Forces campaigner Brett Morgan said.
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