NSW Must Tap CSG or Face Higher Gas Prices

New South Wales businesses and consumers face the risk of constrained gas supply and higher prices in the absence of a growing local gas industry, Santos said in a report Wednesday.

Santos citing an analysis prepared by ACIL Tasman said that there are two fundamental drivers that are changing the gas supply market across eastern Australia. They are:

• Growing gas demand, including for electricity generation driven by the introduction of a carbon price; and 
• The emergence of a large-scale LNG industry in Queensland.

The report finds:

• New South Wales currently imports 95% of the gas it consumes;
• The majority of contracts for the supply of gas to 1.1 million NSW consumers will expire within the next five years;
• Development of a NSW gas industry to a level that makes NSW largely self-sufficient for gas will potentially add billions of dollars to Gross State Product over the period to 2035.

The report finds that as early as 2017, NSW’s traditional sources of gas from South Australia, Victoria and Queensland will increasingly be used to meet rising demand from both Queensland LNG projects and gas-fired electricity generation.

“This report highlights that NSW must either develop its own indigenous sources of gas supply, or confront the real prospect of constrained supply and consequently higher gas prices,” company’s vice President Eastern Australia James Baulderstone said.

The safe and environmentally responsible development of NSW’s gas resources will generate billions of dollars in additional economic benefit and underpin employment in rural and regional communities as well as industries that rely on gas, Baulderstone added.