Second NSW gas terminal ‘critical’

NSW has described as ‘critical’ the need for a second LNG import terminal.

The Liddell power station in Muswellbrook, in the NSW Hunter Valley. Picture: AAP

NSW has given critical status to a second LNG import terminal as it seeks to avoid potential gas shortages hitting the state on peak demand days from 2023.

A proposed $590 million gas plant on Newcastle’s Kooragang Island, which could supply up to 80 per cent of NSW’s gas needs, will today be declared critical state significant infrastructure as NSW scrambles to ensure it has access to sufficient supplies ahead of the Liddell coal plant closure in early 2023.

“The terminal could be operational by 2022-23 and provide supply for gas-fired power stations, helping to manage energy security during the period in which the Liddell Power Station is scheduled to close,” NSW acting premier John Barilaro said.

“This terminal would significantly address this risk and help secure a reliable and affordable future for NSW’s gas supply.”

The Newcastle plant being developed by EPIK — a South Korean LNG project development company — was only proposed last December and remains behind a rival Port Kembla terminal backed by iron ore billionaire Andrew Forrest which is due online in late 2020, and which won critical status in mid-2018.

While the Newcastle facility still needs to move through a full environmental assessment, its backing by the NSW government signals its willingness to develop new sources of supply ahead of the shutdown of AGL Energy’s Liddell.

The electricity market operator has warned NSW, Victoria and South Australia will experience gas shortages on peak demand days from 2023, which big users fear may force heavy industry and local manufacturers to close operations.

If new reserves are not developed, and plans for LNG import terminals stall, southern and southeastern Australia face an overall gas supply shortage from 2024 onwards.

Planning Minister Rob Stokes said, if approved, the terminal would significantly increase local gas supply, promote competition between suppliers and lower gas prices: “NSW currently relies on interstate sources for 95 per cent of our gas supply and experts predict a shortfall in supply from existing sources in the coming years.”

The state’s Newcastle and Port Kembla plants are among five LNG import terminals proposed for Australia’s east coast as part of efforts to ease a supply crunch that has seen prices soar in the last few years, squeezing the competitiveness of heavy industry reliant on the fuel for supply needs.

AGL Energy and ExxonMobil have flagged potential import terminals in Victoria while Japanese conglomerate Mitsubishi is backing a plan to import LNG at Pelican Point in South Australia.