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support of the Australian public. This is fighting Coast pipeline from seeing the light of day, but
talk, but it seems to have missed mounting ques- ensured that cheaper supplies of LNG would also
tions about GPG’s role in the future economy. be much harder to secure.

Cheap gas? Ring-fencing
Morrison’s government threw its weight behind WA Premier Mark McGowan said earlier this
gas as a bridging fuel after a draft NCC report month that the sale of production from future
recommending government support for domes- onshore natural gas projects, barring a single
tic projects as a means of capping gas prices was project, to the East Coast or overseas buyers
leaked in May. would be prohibited.
East Coast wholesale gas prices averaged He said he wanted to avoid a repeat of the
around at around AUD4 per GJ ($111.32 per price volatility seen in the country’s eastern
1,000 cubic metres) for many years until three market, adding: “Western Australia’s domes-
world-class liquefied natural gas (LNG) export tic gas policy is the envy of the nation, and the
terminals came online in Queensland in 2014. updated policy will ensure our state can continue
Prices peaked at AUD20 per GJ ($556.62 per to access reliable and affordable gas.”
1,000 cubic metres) in 2017, before sliding to He made one exemption, allowing the Wait-
AUD4 this year in the wake of both global over- sia project to fill capacity at the Karratha Gas
supply and COVID-19’s demand destruction. Plant and export some of its production as LNG
The NCC believes that the federal govern- “for a short period of time”. Traditional offshore
ment should underwrite investment in new gas LNG projects, which are already required to
pipelines, including one running from WA to the ring-fence 15% of their feedstock production
east, as a means of keeping a lid on fuel prices as for the local market, will not be affected by the
a boost to the manufacturing segment, thereby changes.
driving an economic resurgence. The policy move garnered its fair share of
However, the upstream industry has lashed disparagement. The Australian Petroleum Pro-
back at this, saying AUD4 gas is unfeasible, as duction and Exploration Association (APPEA)
this is below the cost of production. AEMO, warned that such marketing restrictions could
meanwhile, has warned that increasing feed- see the development of new energy resources
stock costs will leave new GPG projects at a com- “stifled”.
petitive disadvantage to battery storage within a “A recent APPEA survey showed 89%
few short years. of members surveyed have deferred project
The ISP’s cost model anticipates not only that investment as a result of COVID-19. Today’s
the cost of battery technology will fall, but that announcement by the WA government serves
gas prices will rise on the back of supply con- only to reduce investment confidence even fur-
straints and political intervention. ther,” APPEA WA director Claire Wilkinson said
One such political intervention took place on on August 17.
August 17, when the WA government not only Former WA premier Colin Barnett, mean-
nixed any hope of the NCC’s proposed WA-East while, labelled the move a “betrayal” of the

P12 www. NEWSBASE .com Week 34 27•August•2020