Australia mulls a west-to-east gas pipeline to shore up east coast supply

PERTH (miningweekly.com) – The federal government has commissioned a prefeasibility study (PFS) to evaluate the potential of constructing a gas pipeline from Western Australian to the east coast gas market.

Federal Environment and Energy Minister Josh Frydenberg said on Monday that the findings from the study might inform a full feasibility study to test the viability of constructing a West-East gas pipeline to provide additional gas supplies and increase competition in the east coast gas market.

“The government is powering forward with a plan that will deliver an affordable, reliable and responsible energy system, which will also help meet our international obligation,” the Minister said.

“Improving the transparency, competitiveness and long-term security of Australia's east coast gas market is a priority for the government as gas is a crucial component of the current and future energy mix to ensure we keep the lights on.”

The Australian Petroleum Production and Exploration Association (Appea) has welcomed the start of the PFS, with CEO Dr Malcolm Roberts saying the gas industry supported rigorous cost-benefit studies for new pipeline infrastructure.

“Provided the business case stacks up, Appea welcomes more interconnection and further steps towards a larger, more integrated national market,” Roberts said.

“But it must be acknowledged that west coast gas is likely to be an expensive solution to east coast supply concerns. The reality is local gas will always be cheaper gas.”

Roberts pointed out recent advice by the Australian Consumer and Competition Council, which stated that customers in Victoria and New South Wales were already paying a 25% premium for importing gas south from Queensland.

“Transportation charges alone would mean gas travelling across the continent would carry an even greater premium.”

Roberts said developing local gas supply was the logical solution to supply concerns in the eastern Australian market.

“Victoria and New South Wales cannot continue to rely on other states to solve their gas supply issues. These states have abundant local onshore resources but would rather import gas from other states or, incredibly, from overseas,” he said.

“It’s time the Victorian and New South Wales governments recognised that the cheapest gas available to homes and businesses in their states is the gas they are standing on. They need to get on and develop it.”

The PFS will be conducted by ACIL Allen, in conjunction with GHD, and is due to report back to government in March 2018.