A decade ago free and fair trade in gas was a government objective, upstream gas competition was an aspiration in many states and territories and the typical gas supply arrangement was a single delivery chain via a single intra-state pipeline from a single source to major demand centres. Gas now flows from a range of basins, natural gas itself competes with coal seam gas (CSG), and a pipeline grid connecting eastern Australia is in place.
Major areas of growth for the industry include power generation, mineral processing, manufacturing demand and residential usage. With what has been termed the “˜third global oil shock’ over the past year, gas is also increasingly being recognised and priced as an internationally traded energy source.
Challenges ahead
With the changes over the last ten years and areas of growth ahead, there are a number of challenges for the gas industry. The first is the role of natural gas in national policies to reduce greenhouse emissions.
Recently, a gas industry advertising effort was launched outlining the financial and environmental benefits of natural gas under the branding “˜Natural Gas the Natural Choice’. The question is: how will the industry continue to ensure that it protects its place as an affordable, realistic bridging fuel in a carbon constrained world and what is the best package of energy policies required to achieve this?
The second challenge is the push to establish a national gas wholesale market. How will a short term trading market in 2010 change the industry? What will the benefits be and who will collect them? What does a short term trading market, and the now functioning gas market bulletin board, mean for the practical task of risking capital for investments in gas production, transportation and supply capital?
A third challenge relates to the place of gas in the new national energy arrangements being put in place by the Ministerial Council on Energy. Gas in many ways developed its own model of national regulation and the Energy Networks Association (ENA) has been very active in seeking to recognise and carry forward the best parts of this unique approach to new energy market laws. The regulatory system should have a more flexible and sophisticated premise, and recognise the relevant differences between gas and electricity regimes. This is particularly true as options for moving technical and safety regulation to a national level are examined.
Solutions for the future
The gas supply sector across Australia is a good example of what private investment linked to long term government leadership can deliver. In Australia’s case it has delivered one of the lowest average prices for gas in the world, linked to high reliability and security of supply. These advantages mean that the industry will continue to function in a positive way.
Recently, ENA commissioned a report examining the potential impact of climate change on Australia’s network infrastructure. The report examines a number of plausible future climate change scenarios from a long term perspective; the capacity to deal with uncertain and changing information; and, responses that may extend beyond jurisdictional boundaries and energy network business responsibilities. These are significant challenges for the energy network businesses. The report therefore aims to illuminate the nature of the potential impacts of climate change that have greatest relevance for the energy network businesses in Australia, as well as suggesting appropriate mitigation and adaptation strategies, and organisational responses alongside the valuable opportunities that can be identified and seized.