By Mike Foley, Nick Toscano and Kieran Rooney
Natural gas will play a bigger role in Australia’s shift to cleaner energy as Labor advances plans for new gas-import terminals and industry braces for new rules to force gas exporters to reserve more supplies of the fossil fuel for domestic use.
Two controversial decisions this week enraged environmental campaigners who fear increasing gas supplies will make it harder to tackle global warming, but underscored the belief within state and federal governments that more gas is needed to power homes and support renewables when the wind is not blowing and the sun is not shining.
Labor governments are acting on their beliefs that more gas is needed to back up renewables.Credit: Simon Schluter
Following a four-year delay, Victoria on Thursday finally gave the provisional green light for fuel supplier Viva Energy to build a floating gas-import terminal at the site of its Geelong oil refinery, which aims to bring in shipments of liquified natural gas from Queensland, Western Australia or overseas for use in the local network.
The ruling came a day after the Albanese government signed off on a four-decade extension of the North West Shelf gas project on Western Australia’s Burrup Peninsula. Federal Resources Minister Madeleine King, meanwhile, is reviewing controls on Queensland’s LNG industry to ensure they boost gas supplies for the eastern seaboard.
The federal government is looking for ways to head off the worsening threat of gas shortfalls emerging in Victoria and NSW later this decade, as ageing gas fields in the Bass Strait that have long supplied the local market rapidly deplete, with few projects to replace them.
Gas industry insiders believe the government could pass reforms to tighten controls on Queensland’s three LNG joint ventures through parliament by the end of the year, where it only needs support of either the Greens or the opposition, both of which have previously endorsed domestic gas reservation.
A spokesperson for the minister told this masthead that the government would guarantee more gas supply for the eastern seaboard.
“The government will progress the planned review of gas market frameworks and the role of market bodies to ensure more gas is made available for Australians,” they said.
Former opposition leader Peter Dutton announced before the election an ambitious gas reservation scheme, which he claimed would boost supply and lower prices.
Energy Minister Chris Bowen rubbished the lack of detail in Dutton’s plain, claiming “he’s making it up as he goes along”. But King this week told an industry conference that Dutton’s move highlighted the need for reform.
“[Dutton’s] foray – as underdone as it was – shows how important gas policy is,” she said.
Prime Minister Anthony Albanese also said this week that “we know the cheapest form of new energy is renewables, backed by gas, backed by batteries and backed by
hydro for firming capacity”.
Asked about the prospect of Labor legislating a gas reserve, Woodside Energy, the largest Australian oil and gas company, said the government should instead do more to boost gas supply by supporting new gas developments and exploratory drilling programs.
“Those are the levers the government should be pulling,” Woodside chief executive Meg O’Neill said.
“There have been a number of interventions in the market that haven’t addressed the root cause of the problem: there is a gap growing between supply and demand.”
Fearing time has run out to develop enough new gas projects in Victoria and NSW, or additional pipeline capacity to avert shortfalls, state governments and industry leaders are increasingly looking to LNG terminals as a solution.
Viva Energy – owner of the Geelong oil refinery – has proposed extending a pier where it would park a vessel capable of receiving shipments of LNG from other parts of Australia or overseas and turn it back into vapour to supply local homes and businesses.
Its provision approval means Viva can now move forward with finance plans for the project.
If it goes ahead, the project would be able to receive 160 petajoules of gas a year, about 80 per cent of the state’s consumption in 2024.
The proposal was met strong resistance from environmentalists and some community members, who argued it was too close to residential areas and schools, and feared it would set back Australia’s climate ambitions by entrenching the use of fossil fuels.
“Investing in new gas infrastructure locks us into decades of emissions at a time when urgent climate action is needed,” Geelong Sustainability spokesperson Jane Spence said on Friday.
However, it is being welcomed by Victorian manufacturers who need gas to run their factories. Tim Piper, Victorian head of Australian Industry Group, said the project approval showed the government’s growing recognition of the need for more gas.
“This is an important change of direction from the government, to recognise the need for this terminal and to facilitate it with conditional planning approval,” Piper said.
The most advanced plan to import LNG is the Port Kembla energy terminal, developed by Andrew and Nicola Forrest’s Squadron Energy, near Wollongong in NSW.
Dutch storage company Vopak, meanwhile, has proposed a floating terminal in Port Phillip Bay, 19 kilometres offshore from Avalon, and Venice Energy is planning one in Port Adelaide.
Squadron Energy chief Rob Wheals said the Port Kembla terminal could help plug supply gaps in Victoria, as well as NSW, and was the only project that could be ready in time to avert the threat of fast-approaching winter shortages.
“The terminal is the only facility capable of meeting the forecast gas supply needs from 2027, without the need for new gas fields in Australia,” Wheals said.
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