Fraccing battle erupts

THE Australia Institute has launched a fresh assault on the CSG industry with its latest paper concluding the industry is likely to have only small economic benefits to Australia and saying a lot more work needs to be done to assess its health and environmental risks.
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Andrew Snelling

The Australian Petroleum Production and Exploration Association has responded with a statement pegging the report as a “polemic styled as a ‘research paper’”

The oil and gas body goes further.

“The Greens-linked TAI has released a compilation of recycled papers that rely heavily on media reports, internally commissioned surveys, and policy papers consistent with the group’s strategies to halt Australia’s coal and gas export industries,” it says.

The TAI report’s author Matt Grudnoff challenges the industry’s assertion that rising gas prices on the east coast are connected to a shortage of domestic gas, writing that these claims “show a complete lack of understanding of what is causing prices to rise” .

Grudnoff claims the future opening of international exports through large LNG facilities in Queensland will open up eastern Australia to world gas prices, forcing the domestic price up towards export parity price.

APPEA has responded to this claim in kind, accusing TAI of displaying a lack of understanding of supply and demand forces.

“Among others, detailed analysis by the Independent Prices and Regulatory Tribunal and the Australian Government Department of Industry has shown that increasing gas supply in the east coast will place downward pressure on gas prices,” APPEA said in its statement.

The oil and gas representative body also referenced the US shale boom and its downward effect on gas prices.

However, it neglected to factor in the rather small gas exports element to the US industry when compared with Australia in the near-term.

Another element of the debate up for discussion in the report is the claim that natural gas is more environmentally friendly than coal.

“The claim is that, when burnt, natural gas produces fewer greenhouse gas emissions than coal,” Grudnoff writes.

“While this is true, it overlooks concerns about greenhouse gas emissions associated with the extraction of CSG, chiefly fugitive emissions.

“There are also concerns about how methane, the main fugitive emission from CSG, is accounted for.”

Grudnoff queried how fugitive emissions, the gas that escapes from the ground during the extraction process, was measured.

He said the method of estimation used data obtained from conventional gas extraction and not unconventional extraction, which allegedly let more gas escape.

APPEA rebutted these claims saying that it was important to keep perspective on how much CSG fugitive emissions contributed to greenhouse emissions when compared to other industries.

It also pointed to the industry’s involvement with a CSIRO study underway to examine fugitive emissions from the production of CSG.

Grudnoff compared the industry’s claim that it created 100,000 jobs in 2012 to Australian Bureau of Statistics numbers that put the combined oil and gas industry’s contribution at 9372 additional jobs.

Economic modelling is blamed for the large disparity and as being the source of industry employment figures, estimating large numbers of indirect jobs associated with comparably small direct job creation.

“Deloitte Access Economics … has estimated that over the investment phase, national employment peaked at about 103,000 full-time equivalent jobs across the Australian economy in 2012,” APPEA said.

“This includes jobs within the oil and gas industry itself, in contracting companies responsible for building the projects and in the sectors that supply key services to the industry.

“It is an investment that will also see the industry’s annual tax contribution rise to almost $13 billion by the end of this decade.”

Tackling health concerns associated with CSG, Grudnoff cited one confirmed and many unconfirmed cases of fraccing chemicals contaminating aquifers in the US.

“The evidence suggests that while gas is actively being extracted from the well the chances of contamination are low, so long as it is managed properly,” he writes.

“But there is concern, and a lack of information, about stranded fracking fluids, which are fluids left in the ground after the well has been abandoned.

“Contamination of aquifers is a real possibility and, like much of the research into the environmental and health impacts of unconventional natural gas, there are still many unknowns.”

APPEA said TAI had turned a blind eye to the gas industry’s long track record of safely supplying energy to Australia and the world.

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