Santos Warns of Gas Shortage in NSW

Santos, NSW's largest coal seam gas player, has warned the two year delay in exploration is expected to result in gas shortage and higher prices in the state.

The company is inching towards commencing its long-planned $500 million exploration and appraisal program, with the aim of getting its first gas flowing in the Pilliga-Narrabri region within the next few years, Australian Financial Review said citing Santos' vice-president of eastern Australia, James Baulderstone.

Smaller explorers Dart Energy and Metgasco are also seeking to get drilling going in their permits within the next few months, AFR said.

But the effective freeze on exploration and drilling permits that had been in place since before the Coalition government took control in the NSW state election in March 2011 will make it difficult to avoid gas shortages and higher prices around the 2014-15 period. The Queensland gas export projects will start to suck up supplies from the eastern states that could ­otherwise have flowed to NSW.

Bernstein Research estimates gas prices in eastern Australia will double to about $8 per gigajoule over the next three to four years, the report said.

"When the tightness comes in 2015-16 it will be as a result of the last two years. We can't make that up now," he said.