COLIN BAR­NETT

Com­mon sense says we should tap our own re­sources

The Australian - - FRONT PAGE - COLIN BAR­NETT Colin Bar­nett is the mem­ber for Cottes­loe in the West Aus­tralian par­lia­ment and the for­mer WA pre­mier.

The Over­land Tele­graph Line was built in 1877 and the Tran­sAus­tralian Rail­way in 1917. These projects were bold for their time and helped bring to­gether a young Aus­tralia.

With the elec­tric­ity and gas cri­sis on the east coast, we could do with some of that pioneer spirit and vi­sion today. Why not a transcon­ti­nen­tal gas pipe­line?

It is sim­ply ex­tra­or­di­nary that a coun­try so rich in en­ergy re­sources faces an en­ergy short­age. Aus­tralia is the sec­ond-largest ex­porter of coal, home to one-third of the world’s ura­nium re­serves and will be the lead­ing ex­porter of liq­ue­fied nat­u­ral gas by the end of the decade. And there is an abun­dance of sun­shine and wind.

The rea­sons for the en­ergy cri­sis are many and over­lap­ping. They in­clude an ex­pen­sive re­new­able en­ergy tar­get, the un­re­li­a­bil­ity of re­new­ables, the clo­sure of coal-power sta­tions, the ex­port of east-coast gas, bans on coalseam gas and reg­u­la­tory fail­ure.

The pro­posed so­lu­tions are equally di­verse. These in­clude lift­ing the ban on CSG, pump­ing wa­ter up and down the Snowy Moun­tains, re­strict­ing LNG ex­ports, keep­ing old power sta­tions go­ing, so-called clean coal, new clean-en­ergy tar­gets, big bat­ter­ies, emer­gency diesel gen­er­a­tors and so on.

What these “so­lu­tions” have in com­mon is that they are ad hoc, of mar­ginal im­pact and mainly short-term. They re­flect a lack of a co­her­ent na­tional en­ergy pol­icy. Mean­while, house­holds have had a 20 per cent rise in en­ergy costs and busi­nesses have ex­pe­ri­enced in­creases of 40 per cent or more.

It is ob­vi­ous a new and re­li­able source of en­ergy needs to come into the do­mes­tic mar­ket. And yes, the op­por­tu­nity should be taken to en­sure it is cleaner en­ergy.

Gas is an ob­vi­ous so­lu­tion. The emis­sions from a com­bined-cy­cle gas plant are less than half of that from a coal-power station. As­sum­ing the bans on CSG re­main in place, the only al­ter­na­tive is to make bet­ter use of Aus­tralia’s con­ven­tional, or reser­voir, gas.

There are two ob­sta­cles. The first is the po­lit­i­cal in­flu­ence of the coal lobby and the re­new­able lobby, both of which see gas as a com­peti­tor to their own in­ter­ests. And sec­ond, the gas is a long way away.

Aus­tralia has con­ven­tional gas re­serves of about 167 tril­lion cu­bic feet. Aus­tralia’s do­mes­tic mar­ket con­sumes just 2TCF of gas a year. In other words, there is eas­ily more than 75 years of gas avail­able, with more to be dis­cov­ered. The prob­lem is 95 per cent of this con­ven­tional gas re­source is off the Western Aus­tralian and North­ern Ter­ri­tory coasts.

To make use of this gas and thereby solve the en­ergy short­age re­quires a transcon­ti­nen­tal pipe- line. It is true LNG could be trans­ported by ship, but that would tie Aus­tralia into in­ter­na­tional prices and there­fore sac­ri­fice a po­ten­tial gas ad­van­tage at home.

The pipe­line would need to con­nect the north­west coast to the ex­ist­ing gas in­fra­struc­ture at Moomba in cen­tral Aus­tralia. That is about 3000km. The es­ti­mated cost is about $5 bil­lion, which is sig­nif­i­cant, but should be seen in the con­text of the na­tional broad­band project that is costed at $49bn.

In the 1990s, a 1500km pipe­line, of smaller di­am­e­ter, was built from the north­west coast to Kal­go­or­lie in one year at a cost of $450 mil­lion. In the early 1980s, a larger di­am­e­ter but sim­i­lar length Dampier-to-Bun­bury pipe­line was built in 10 months and cost about $1bn. That pipe­line has since been du­pli­cated.

Pipe­lines are not dif­fi­cult from an en­gi­neer­ing per­spec­tive. They can vary in size and gas pres­sure as well as be ex­panded by a process of loop­ing. A buried pipe­line is out of sight and can use ex­ist­ing in­fra­struc­ture ease­ments. And un­like other parts of the world, there are no phys­i­cal bar­ri­ers in cross­ing the flat and largely empty space of cen­tral Aus­tralia.

Trans-con­ti­nen­tal pipe­lines are com­mon through­out the world. A sim­i­lar project for Aus­tralia should be pri­vately funded and op­er­ated. The proper role for gov­ern­ment is to set the pol­icy and seek pro­pos­als for de­vel­op­ment. The pol­icy might well in­clude a com­mit­ment to us­ing more gas in power gen­er­a­tion. The pipe­line pro­po­nents are likely to in­clude gas pro­duc­ers and en­ergy util­i­ties.

With­out a sig­nif­i­cant in­crease in gas sup­ply, the east coast en­ergy cri­sis is cer­tain to con­tinue. In other words, house­holds and busi­nesses will face fur­ther steep price rises with­out any cer­tainty over the re­li­a­bil­ity of sup­ply. That will fur­ther hurt house­hold bud­gets and dis­cour­age busi­ness in­vest­ment.

Surely it is time for some prag­ma­tism and com­mon sense. Surely we should use more of our gas for Aus­tralia.

BLOOMBERG

The key to ex­ploit­ing en­ergy re­sources is WA gas

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