The activist group cited a submission by the Independent Pricing and Regulatory Tribunal to the inquiry into the supply and cost of gas and liquid fuels in NSW last month, which the activist group said asserted that drilling for CSG in the state would not bring down gas prices in NSW, as the international market would influence prices.
IPART’s submission said it was “unclear” how the development of CSG reserves in NSW might affect domestic gas prices.
“At least in the short term, NSW would still be a small supplier in the context of the world gas market,” IPART said.
“In our view many other factors, for example domestic and international gas demand and the availability of LNG export capacity, would have a bigger impact on the price of gas in NSW.”
In a release by Our Land Our Water Our Future, Liverpool Plains farmer Phil Herbert said the industry's claim that drilling CSG would bring down gas prices is “a blatant lie”.
“The state government needs to recognise this and declare CSG off limits in the critical water recharge area for the Great Artesian Basin,” Herbert said.
“The Narrabri CSG project is uncertain and controversial, while the risks to water users are well documented.”
He said 79% of the basin’s most critical water recharge areas were covered by gas, petroleum or CSG leases and there was a “clear need for better protection of these critical recharge areas”
“The NSW government has an opportunity to do the right thing and put an end to the conflict over its risky coal seam gas project by looking at energy options other than the increasingly unviable Narrabri gas project,” he said.
Herbert called on the NSW government to commit to limiting CSG around the critical water recharge area of the Great Artesian Basin, which he said “makes sense for local community members concerned about the impacts on water resources and local farmland”
“The memorandum of understanding between the government and Santos for the Narrabri Gas project is invalid, Santos has shown time and time again that they are not fit to manage the risks to water, farmland and our local communities,” he said.
With over 75% of household and small business gas customers no longer on regulated prices and entering market contracts with a gas retailer, IPART regulates prices for the remaining customers by agreeing multi-year pricing agreements with each ‘standard retailer’, which are AGL, ActewAGL and Origin Energy.
IPART attributed the 11.2% on average rise in regulated retail gas prices on July 1 last year – taking into account the carbon price removal – to higher wholesale gas costs arising from a “fundamental change” to the wholesale gas market in eastern Australia.
“For the first time, the ability to export LNG means that gas reserves previously supplied to NSW are being directed through Gladstone for export,” IPART’s submission said.
Eastern Australia is becoming part of a single global market for commodity gas and wholesale prices are being increasingly set by international prices.
“In the future, it is likely that NSW gas retailers will have to compete with offshore demand and pay export parity prices for wholesale gas.”
Interestingly, IPART came down on the side of Australia’s upstream industry on a reservation policy.
“We do not consider that a domestic reservation policy is an appropriate way to protect NSW gas consumers from higher prices,” IPART said.
“Imposing a requirement that producers must reserve a fixed volume or proportion of gas, for say domestic manufacturing, is a form of industry protection,” IPART said.
“The economic benefit of the gas resources is shifted from producers to particular industry consumers. This redistribution would be achieved at a net cost to the Australian economy and is inefficient.”
