SUBJECTS: Proposed gas terminal at Newcastle Port
JENNY MARCHANT: If you’re down and around Newcastle regularly, you’d be used to seeing coal ships, ferries, the recreational craft – even the occasional cruise ship, of course, and it seems like we could soon be seeing liquefied gas coming and going on our harbour.
DAN COX: The New South Wales Government made something of a surprise announcement yesterday, it declared critical infrastructure status for a terminal worth almost $600 million, and it’s going to be built by South Korean company, EPIK. Planning Minister, Rob Stokes told us it was necessary to create competition.
STOKES: “I’ve taken the position that this particular project is of critical importance to the State’s energy future”
MARCHANT: Why is it so critically important?
STOKES: Well, Jenny, we are reliant on inter-state sources for about 95 per cent of our state’s gas needs.
MARCHANT: Okay. So, for a look closer to home at what this might mean Joel Fitzgibbon is here, the Federal Member for Hunter. Good morning.
JOEL FITZGIBBON: Good morning, Jen.
MARCHANT: Did you know much about this development before yesterday’s announcement?
FITZGIBBON: Yes, it’s been floating around for a while and, of course, delivering more gas to market can only be a good thing, and in terms of Newcastle, of course, it has to pass the strictest environmental and safety standards, but I believe it can do that.
But it’s all about cost in the end. We want lower energy prices for both households and, of course, our business community, and LNG is relatively expensive. I heard what Garbis Simonian had to say – he’s absolutely correct. Just for your listeners, LNG is cooled down and liquefied natural gas, and the process of cooling it so that you can liquefy it and transport it is both very, very expensive, and, of course, greenhouse gas intensive.
So, LNG is obviously an option, but we do need competition in the market, and we do have opportunities to extract gas from the ground – not all that far from the Hunter region in Narrabri – and that should really be our focus. And I’m a bit concerned that this is a Government attempt to put that back on the back-burner. We need cheap, reliable sources of gas.
MARCHANT: Well, you mentioned Garbis Simonian comments in our news this morning; he is the Managing Director of this Queensland-Hunter gas pipeline. He thinks that domestic gas would be cheaper and that would mean that the market is going to be more competitive. Is there not a place for both in the market? The imported and the domestic gas?
FITZGIBBON: Absolutely, but my point is; I don’t want this to be an excuse not to do the other, and of course, the Minister yesterday – and John Barilaro, the Deputy Premier – have been talking about the Liddell, and I do fear this is a bit of spin to pretend the Government is doing something about the Liddell.
Both the Commonwealth and the State Government spent a long time talking about extending the Liddell beyond its 50 year life. That was never going to happen. We’ve known for at least a decade now that the Liddell would not go beyond 50 years of age, and it’s a bit late now to be talking up a scramble to do something about it so close that closure date. This should have been happening a long time ago.
COX: How important is a floating gas terminal in Newcastle for securing the nation’s energy needs once Liddell is closed?
FITZGIBBON: Well, the great tragedy is that we’re talking about importing gas to sure up the country’s energy needs when we are an energy rich country, and we’ve got an abundant supply of gas sitting under our land surface which could easily be extracted without any damage to the environment or our water tables. There are some places where that may not be able to be done safely, but there are certainly plenty of places where it can be done safely and without a threat to the natural environment - that should be our focus first and foremost. Why are we focusing on liquefying and cooling a gas, much of it may be imported, when we have such an abundance of gas here that which can be delivered to markets much more cheaply? Now I say, all of it is great because the more competition we have the more likely we will get lower prices.
MARCHANT: You yourself have said we need action and quickly to secure the energy supply post Liddell and we are only looking at a few years down the road here. Should this be approved, it could be up and running quickly with imports couldn’t it? And that would seem to support what your calling which is for a more secure power supply based on gas.
FITZGIBBON: Yeah it potentially could be up and running, even more quickly than Narabri, even if the government gave the green light to Narabri today. And that is a good thing – I welcome the LNG proposal – I’m just saying it can’t be an excuse not to do other things and, of course, gas alone can’t produce electricity. You’ve got to have a gas fired power station; so we need to be sending all the right signals to all the AGLs of the world that they will have an affordable, reliable supply source of gas if they are prepared to invest in a gas fired power station in the Hunter region, that’s got to be our main game. If we are going to replace the capacity of Liddell, we will need a gas fired power station, we will need to proceed with those upgrades on Bayswater, and I am assured that will be the case, and we need to get that investment in battery storage, pumped hydro, and other forms of renewable energy in the Upper Hunter.
COX: Does this project pave the way for AGL’s gas plan to Tomago?
FITZGIBBON: Well, yes. Well, another supply of gas – affordable and secure gas – will pave the way. Obviously the price of gas is one of the things AGL has to consider when justifying the capital costs of a gas fired generator, which is up to half a billion dollars. We’ve got to be able to demonstrate to the market that if we are going to build these things we can be assured that they have both reliable gas and affordable gas, and the LNG terminal by introducing more competition, and more supply, certainly helps us to get that assurance. But we should have been doing this a long time ago; we shouldn’t be scrambling so close to midnight.
MARCHANT: Ok – Joel Fitzgibbon, thank you very much.
FITZGIBBON: A great pleasure.