You can’t extract politics from Narrabri Gas
2 October 2020
To understand how an almost unanimously unloved, environmentally reckless and financially dubious project such as Narrabri Gas has just cleared a major development hurdle you have to look at the politics driving it.
On 30 September the NSW state government’s Independent Planning Commission (IPC) conditionally approved the Narrabri Gas project in northern New South Wales. If fully developed the project will involve the drilling of 850 wells across 1000 hectares of land to produce up to 200 terajoules of gas a day (around half of NSW’s current gas demand) for domestic use for 20 years.
In responding to the IPC’s approval Santos CEO Kevin Gallagher said the company was “excited about the prospect of developing the Narrabri Gas Project”, a “game-changing project… critical to creating jobs, driving investment, turbo-charging regional development and delivering more competitive energy prices” as the economy recovered from COVID-19.
But it wasn’t so long ago that Narrabri was considered a non-core project by Santos. As part of a “new strategy to drive shareholder value”, announced on 8 December 2016, Narrabri was to be packaged up with other low priority assets by Santos to form a separate business.
In its 2016 Full Year Results presentation, released in February 2017, Santos said its focus was going to be on “five core long-life natural gas assets”. None of them included Narrabri, which the company reiterated was a “non-core” asset.
However in the same month Santos submitted a State Significant Development Application and associated Environmental Impact Statement (EIS) for the Narrabri Gas Project to the NSW Department of Planning and Environment. Surprising for a non-core project.
Politically, Narrabri Gas was receiving vigorous public support from both the LNP New South Wales state government and the LNP federal government as domestic East Coast gas prices, as predicted, continued to rise sharply due to coalseam gas LNG exports (that’s another story).
In September 2017 Prime Minister at the time Malcolm Turnbull offered his whole-hearted support of Narrabri Gas in response to government-commissioned reports by the Australian Competition and Consumer Commission and the Australian Energy Market Operator that concluded the shortfall of gas in the east coast domestic market would be far greater than previously indicated.
“We strongly encourage the NSW Government to approve the development of the Narrabri Gas Project which will add over 58Pj of gas per year. The sooner that is brought on line the better. That is critical to the energy security of Australia, the energy security of this state NSW, which I might say imports 95% of its gas it uses,” Prime Minister Turnbull said.
The project became tangled in a protracted approvals process through which Santos had to respond to 23,000 public submissions generated by its 7000-page Environmental Impact Statement.
Progress was slow, even as the political jungle drums continued to get louder for Australia to produce more gas.
There was a perception the IPC was dragging its feet in assessing Narrabri gas and other major resources projects, with the Minerals Council of NSW publicly critical of both the IPC and NSW Planning Minister Rob Stokes.
In October 2019 Stokes announced a review of the IPC to be conducted by the NSW Productivity Commissioner, which lead to several new reforms being introduced to “Cut red tape, increase transparency, [and] reduce assessment timeframes”.
Political support for Narrabri Gas continued to build at the federal level with Prime Minister Scott Morrison announcing in January this year the NSW Gas Deal. One of its objectives, obviously targeting the Narrabri project, was “Commitments from the NSW Government to facilitate investment opportunities to inject an additional 70 petajoules of gas per year into the east coast market”.
Then in September the PM announced his “gas-fired recovery” plans to “help re‑establish a strong economy” following the COVID-19 downturn, which specifically names Narrabri as a new source of gas supply whose development must be accelerated.
All this political support, reform and legislation from all levels of LNP governments culminated in the IPC’s decision on 30 September.
So what can the project’s supporters expect if the following stages of approvals are successfully negotiated to allow development of this deeply unpopular coalseam gas project?
While another massive and controversial resources project, the Adani coal mine in central Queensland, was able to overcome strong public resistance on its path to starting development it is isolated in a remote part of the country far removed from population centres and competing land uses.
A more instructive comparison, far closer to the Narrabri Gas project in northern NSW, was a proposed gas development located around 20km west of Lismore in the Northern Rivers region.
Exploration company Metgasco proposed to drill a conventional (not for fracking) gas exploration well named Rosella East-1 starting in April 2014. However a crowd of some 2000 protestors set up a blockade near the site and the company backed down.
Under pressure the state government revoked Metgasco’s drilling licence the following month, and in November that year bought Metgasco’s exploration permits in the region for $25 million.
What was known as the Bentley Blockade was a significant victory for the environmental movement and community power in general, and entered the activists’ handbook of how to block unwelcomed development.
Although Bentley was closer to the coast in what most people would consider a more “progressive” community makeup, there are some salient lessons for Santos and government in what happened there.
It should not be lost on either that the decision to drill Rosella East-1 was made in a remarkably similar political background to today, with a newly elected federal Coalition government aggressively pushing for expansion of the NSW gas industry.
Then Resources Minister Ian Macfarlane said in September 2013 the federal government would intervene to fast-track coal seam gas projects in New South Wales in response to the state’s “gas crisis”, which he predicted could see the state running low on gas by 2016 costing thousands of jobs. Macfarlane is now chief executive of industry lobby group the Queensland Resources Council.
However the Bentley Blockade blew back on the state government in the 2015 NSW election with the sitting National Party member for the electorate of Ballina losing his seat to the Greens, and the incumbent at the time just hanging on in another traditional Nationals stronghold of Lismore.
It’s debatable who’s the most committed to driving Narrabri Gas forward. The project appears to flare up when the politics ignites it, then be dialled down again – to the point of being openly declared “non-core” by the proponent – as the heat dies off.
You could argue Narrabri Gas has become a symbol for the LNP state and federal governments’ push to keep fossil fuels in the energy mix at any cost, regardless of the consequences, and the COVID-19 “gas-fired recovery” response is a new opportunity to make a fresh push.
Missing the energy transition boat again
29 September 2020
There was one glaring omission in the energy policy announcements made by the Australian federal government this month.
Released in two tranches, the new measures covered a lot of ground including a Technology Investment Roadmap to lower greenhouse gas emissions, generation reliability and security, and the role gas will play in a recovering economy post-COVID.
More specifically, the government prioritised funding and incentives for several technologies such as hydrogen, long duration energy storage, low carbon materials, low emissions steel and aluminium, carbon capture and storage and soil carbon.
Gas was picked as the generation fuel of choice for so-called “dispatchable” energy to replace the Liddell coal-fired power station before it closes down in 2023.
While both men praised the role renewable energy overall had played in lowering electricity prices, not once in thousands of words in news releases and speeches did Prime Minister Scott Morrison or Minister for Energy and Emissions Reduction Angus Taylor mention a critical technology type that is booming around the world; offshore wind power.
Sure offshore wind is not a new technology – the first turbine was installed in Sweden in 1990 – but it is in Australia, and by including hydrogen and carbon capture & storage in the Technology Investment Roadmap the government wasn’t just looking towards new technologies either.
Although the necessity for offshore wind farms is not, on face value, as pressing in Australia as it is in more densely populated countries such as parts of Europe and Asia, there are a number of feasible potential locations around our coastline. Given that 85% of Australia’s population lives within 50km of the coastline, and the transmission system is built to accommodate coal-fired generation (also proximate to the coastline), offshore wind should be a very obvious play for Australia.
Developments are being planned at three of these locations; the Star of the South project off the south coast of Gippsland in Victoria, the newly announced Mid West Wind and Solar Project on the mid-west region coast of Western Australia near Geraldton, and offshore Newcastle in New South Wales which is yet to be publicly announced.
Of these Star of the South is by far the most mature with the Australian founders (operating as Offshore Energy) introducing large international investment in 2017 (from offshore wind leaders, Copenhagen Infrastructure Partners) and starting extensive preliminary feasibility studies from late 2017 for a project with a capacity of at least 2000MW connected via 95km of undersea and underground high voltage transmission cables to a connection point on the Victorian grid in the Latrobe Valley.
The Mid West Wind and Solar Project, announced in early September by Australian Stock Exchange-listed Pilot Energy, includes a conceptual design for up to 1.1 GW of offshore wind power generation comprised of up to 78 X 14 MW wind turbines. A detailed feasibility study is underway.
Around the world the offshore wind market is going through the roof. A report released in August by the Global Wind Energy Council (GWEC) found that 6.1 GW of new capacity was built in 2019 – the best year ever for the global offshore wind industry – with 6.6 GW forecast to be installed in 2020 despite the economic impacts of the COVID-19 crisis. Incredibly, GWEC predicts offshore wind capacity will surge to over 234 GW by 2030 from 29.1 GW at the end of 2019, led by the Asia-Pacific region.
With the promise of the creation of a new industry bringing with it thousands of jobs, the ability to utilise existing offshore skills and help the inevitable transition from fossil fuels you’d think the federal government would be 100% behind offshore wind.
However it is dragging its feet. Although Offshore Energy was granted in March 2019 an exploration licence allowing it to undertake technical and environmental studies for the Star of the South project, there is no legislative framework to allow for the development and operation of offshore wind farms in Australia.
An Offshore clean energy infrastructure regulatory framework discussion paper was released by the federal Department of Industry Science Energy & Resources in January 2020, with information sessions held that month in Perth and Melbourne. Public feedback about the discussion paper closed on 20 February 2020.
Publicly, federal government ministers have confirmed when asked – without offering much detail – that the legislation is making progress. Most recently Darren Chester, who is the federal member for Gippsland and a front bench minister, said that he’d have to follow up on a question asked on a television program about the legislation. Star of the South would create thousands of jobs and attract billions of dollars of investment to this cabinet member’s electorate but he couldn’t provide any information about where the enabling legislation was at.
And if ever there was an opportunity to announce the federal government’s support of this job-creating, skills-rich, transformational new industry it would have been as part of the Technology Investment Roadmap. Australia is missing the energy transition boat again.