Oil and Gas News

The importance of the industry for reliable energy: APPEA

The Australian Petroleum Production and Exploration Association (APPEA) chief executive Andrew McConville has used the association’s submission to the Gas Fired Recovery consultation to highlight how the industry will continue to play a key role in ensuring reliable, secure and competitively priced energy for all Australians.

The submission supports in principle Federal Government plans to create the Wallumbilla gas hub in Queensland but only with transparent reporting for both producers and manufacturers. However, APPEA warned any moves to replicate a Henry Hub in Australia is both unrealistic and may have perverse price outcomes.

“The industry played a leading role a decade ago in the development of the existing gas supply hub at Wallumbilla, and the other short-term trading markets that exist on the east coast,” McConville said.

“We look forward to drawing on that experience and on the industry’s experience trading in these markets, as we move to the next stage of more detailed design and consultation.”

McConville added that APPEA’s submission focuses on how it can secure economic contribution and bring billions of dollars of new investment online so there is more gas into the market, supporting both domestic gas consumption and the LNG export projects that are underpinning much of Australia’s economic growth.

“Already the industry has spent $450 billion developing infrastructure and domestic gas prices have steadily declined since 2016. Our submission is about igniting the industry and Australian economy again for the next 20 years,” he said.

“With the right policy settings a recent [Ernest & Young] report said the industry could boost national economic output by more than $350 billion and support the creation of 220,000 jobs over the next two decades.

“Our submission to Gas Fired Recovery consultation focuses on how we can achieve this economic output and bring billions of dollars of new investment online so there is more gas into the market, supporting both domestic gas consumption and the LNG export projects that are underpinning much of Australia’s economic growth.”

APPEA said the Wallumbilla gas hub near Roma has a role to play in any gas fired recovery but that any reporting requirements put in place must be fair. It warned any moves to turn it into a US-style Henry Hub will backfire.

“We need to ensure the Hub structure should minimise the need for government intervention in the operation of the market,” McConville said. “Development should be market-driven, and large-scale changes driven by the requirements of existing and future participants.

“Importantly, any efforts to model Wallumbilla on the Henry Hub will fall drastically short. We need an Australian solution for an Australian industry. The fundamentals of the US gas market, particularly on the supply side, are vastly different, given that the gas is largely a by-product of significant liquids development compared to very dry onshore gas developments in Queensland.”

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