Beetaloo gas can transform the energy outlook for the east coast of Australia and the election race
It should become a late centre-stage election issue. Both parties can win from the development but Opposition Leader Peter Dutton could combine the gas breakthrough with a one-year extension of his current one-year petrol rebate policy.
The combination of a two-year petrol rebate and Beetaloo gas means lower-cost energy over three years and beyond. While the additional excise reduction cost will be around $6bn, it has a clear end.
Lower petrol costs are a great boost for outer suburban and rural areas. In inner affluent suburbs Dutton has unbelievably ignored the ALP’s so-called “saver’s tax” – the tax on unrealised capital gains.
Again, recent developments can make this a red hot issue. Whether an apparently moribund Coalition is able to change direction is an unknown.
The latest drilling results from the giant Beetaloo deposit show that with government policy innovation, the energy outlook in Australia can be transformed by August 2027, just over two years away. For Dutton, it means he can offer Australians a totally different short and long-term energy price outlook.
Anthony Albanese could do the same thing but because he is the frontrunner, late major changes are difficult.
In the first debate, the person with the clearest idea of what vast areas of business require was the tradie who pointed out to Dutton that a one-year fuel excise reduction was too short. Asked why he was not extending it, Dutton replied that he would “consider it” after the first year.
The potential good news for all tradies is that thanks to the Beetaloo breakthrough, Dutton can undertake that consideration now (not in a year’s time) and extend the excise reduction by a year to July 2027. That’s when abundant gas can transform the energy outlook for the east coast of Australia.
Dutton has been emphasising the small business failure rate in Australia. The most tangible help he can give in this area is to lower fuel costs for two years and combine that with guaranteed gas power generation where appropriate.
Nuclear will eventually come, but now we have abundant gas the government does not need to spend money on nuclear power in the next three years (although, given our looming submarine nuclear reactors, an outright ban makes no sense). If private enterprise wants to erect a nuclear power plant that meets the necessary safety criteria then it should not be stopped.
Even good renewable energy projects need gas power to be economic (on present technology, batteries and most new hydro projects are too costly).
Given the ALP concedes gas power is needed, a national energy policy that incorporates gas and renewables is possible.
The Beetaloo gas reserves are immense – many times those of the Gorgon deposit in WA.
The gas is 3.5km deep and requires up to 4km horizontal pipes at that level.
The existence of the gas is not in doubt; the challenge is extracting it economically.
The results indicate the gas availability and cost matches the biggest fields in the US and can satisfy the east coast of Australia. But an accelerated drilling program to the end of July using the skills brought out from the US will add further confirmation.
The Beetaloo gas is north of Tennant Creek. Remarkably there is a pipeline network from Tennant Creek to the Moomba interchange complex which connects it to Brisbane, Sydney, Melbourne and Adelaide. The gas will also go to Darwin.
Much of the existing Tennant Creek to Moomba pipeline is too narrow but it provides an easement for a duplicate pipeline. There are also alternative routes, although the existing route is a potential boost to western Queensland. Eastern Australia is desperately short of the gas it needs to maintain industry and domestic use, and gas-fired power is required to make renewables investment economic. We have a looming crisis.
The prime minister after May 3 should step in and notify the Beetaloo partners led by ASX-listed Tamboran Resources that if the accelerated drilling between May and July confirms the latest analysis, the government will guarantee gas supplies to justify an immediate start to the pipeline and also guarantee the distributors that the gas will be available.
In suggesting this strategy earlier this month, I conceded that this was a radical action with a degree of risk, but nations take such actions in a crisis and the risk is acceptable.
If a conventional path is embraced where each stage is locked in with total certainty, the gas will not be available until 2028-29 – a potential disaster for the nation.
A second potential national disaster is the proposed “saver’s tax” which is being concealed by a cleverly contrived smokescreen – a proposed 30 per cent tax on superannuation income where members have balances above a non-indexed $3m. On the surface the tax is simply double the 15 per cent tax which continues on income from assets below $3m.
But income from assets above the unindexed $3m will be subject to the “savers tax” on unrealised gains. This is bizarre legislation because it would be simple, logical and fair to use the same tax method to calculate the liability on all assets. Only the percentage changes.
Provided the $3m trigger is indexed there is not a lot of debate about imposing a fairly calculated 30 per cent tax liability and the legislation would have passed the last parliament.
More Coverage
Analysis of drilling results from the enormous Beetaloo gas deposit in the Northern Territory shows that low-cost non-nuclear energy can now transform the nation in just over two years.