Beach slams lack of leadership on CSG

AUSTRALIA is ignoring "the energy equivalent of the internet" by banning access to coal-seam gas, warns the boss of Beach Energy.

AUSTRALIA is locking the gate to "the energy equivalent of the internet" by banning access to coal-seam gas, warns Reg Nelson, managing director of Beach Energy.

Mr Nelson told the Melbourne Mining Club yesterday that "a revolution that's underpinning US energy security and the rebound of its economy can also be Australia's".

However, "environmental activism, fuelling community concerns, and a lack of policy leadership are compounding" the gas supply crisis for east coast Australia, with coal-seam gas bans in place in NSW and Victoria.

This leadership failure, he said, had "allowed certain special interest groups to play an undue role in driving government decision-making" -- even though gas demand was set to treble by 2016, creating the opportunity for a gas-led investment boom as big as the mining boom.

Mr Nelson, who has led Adelaide-based Beach -- which has a market capitalisation of $1.8 billion -- since 1995, said the answer was "honest, transparent communication of the facts".

"We have gas in abundance," he said. "We need to get policy settings right. We don't need more reviews. Reviews mean more delays. We need to streamline regulation; there is too much overlap and contradiction.

"And we need a return to science and facts -- not consensus by Twitter, which had driven an emotional campaign."

The industry must stand together on the issue, he said, although delays in NSW would benefit Beach -- and even though parts of the gas industry originally failed to engage with the community.

He contrasted the benefits of the gas revolution in Queensland, "bringing young people back to regional centres", with that of those who opposed the industry in NSW and in Victoria.

Opportunistic claims by some industry sectors for gas reservation policies and other subsidies were continuing to muddy the waters further, he said.

The old gas-pricing regime would not encourage the risk-taking required.

"Higher prices must prevail in a market where demand outstrips supply, Mr Nelson said. "But if we can unlock the (geological) code, there will be gas for the market . . . with minimal transport costs. That's a recipe for stability of pricing -- and ultimately lower costs in real terms. As producers, we want to expand our market opportunities, not drive them away through higher pricing.

"We'll be content with reasonable rates of return, if we're able to increase our sales volumes.

"Our margins will then be enhanced if we can reduce our costs, as is happening in the USA."

He said the exploration focus in Australia had shifted onshore "where exploration costs are a fraction of those offshore".

The Cooper Basin was well placed to provide a timely rescue, Mr Nelson said, "with over 3000 wells drilled and more than 700 of these fracture stimulated" -- strongly backed by the South Australian government and the community. He also noted "how quickly the Queensland government has responded to bedding down concerns with the CSG industry and is now ensuring that its huge shale and tight gas resources can be developed".