Australia Institute questions wisdom of NSW Narrabri gas project

The NSW Department of Planning has been accused of uncritically repeating ‘misleading claims’ about the controversial $3.6bn Narrabri gas project.

Santos’ Narrabri Gas project. Picture: Nathan Edwards.

The NSW Department of Planning has been accused of uncritically repeating “misleading claims” made by Santos for its controversial $3.6bn Narrabri gas project, with The Australia Institute stating the project will fail to deliver cheaper gas and cannot guarantee supplies for local users.

Amid a Morrison government plan to boost the role of gas to help industry through the COVID-19 pandemic, the Canberra think tank said the decision by the NSW government to recommend the development was misguided.

“The NSW Department of Planning, Industry and Environment assessment of the Narrabri gas project uncritically repeats many of Santos’s misleading claims justifying the project,” The Australia Institute’s principal adviser Mark Ogge said in a submission to the Independent Planning Commission which is assessing the project.

“The assessment’s recommendation for approval of the Narrabri gas project is largely based on the project ‘increasing energy security and reliability in NSW’ and providing economic benefits to NSW and the Narrabri region. In reality, it will do nothing to improve energy security and reliability and provide few benefits to the local community.”

The IPC is currently undertaking a final assessment of the development, which included a major public hearing with over 400 presentations, after the facility received sign-off from the NSW government in June. Written submissions close on August 10 and the IPC has until September 4 to make a recommendation.

Santos touts the development — which could supply half the state’s gas needs — as a solution to the tight east coast market by undercutting LNG imports and offering the cheapest new supply source in the state if it does get the nod from planning tsars.

Santos produced new modelling from ACIL Allen on the eve of the first day of public hearings on the project, showing gas prices in Sydney would be between around 4 per cent and 12 per cent lower from 2025 onwards over the 25-year evaluation period with the Narrabri gas project than without it.

However, The Australia Institute noted the NSW Planning Department’s director David Kitto contradicted the government’s own advice after he told the IPC Narrabri would not reduce tariffs.

“Not only is the Narrabri gas project unlikely to reduce gas prices, it is likely to increase them,” Mr Ogge said. “This is because gas supplied to NSW customers from the Narrabri gas project will displace lower cost gas currently being supplied to NSW customers. Much of that gas is from the Cooper Basin in South Australia. Independent analysis shows this gas can be produced at a considerably lower cost than gas from the Gunnedah Basin which would feed the Narrabri gas project.”

The Australia Institute also said there was no way of ensuring the gas was all supplied to NSW users, given the market is interconnected and is sold and transported under deals cutting across different states.

The IPC held meetings in late July with NSW planning, environment and water experts after a public hearing raised concerns over “knowledge gaps” in crucial modelling for the project.

Among the chief concerns raised by critics of the proposed gas facility was the potential for the Basin and surrounding aquifers to be poisoned due to underground drilling, putting in danger both local farms and the region’s agricultural products produced from the land.