Submission to the Queensland Government on its Proposed Gas Reservation Policy
Queensland's reserves of Coal Seam Gas (CSG) are a major asset. Development of the gas may have been assisted by regulations that require 13/15 per cent of electricity in the state to be generated by gas. Some deposits may also benefit from a subsidy if they are classified as a "renewable" form of Energy under the Commonwealth's Renewable Energy (Electricity) Act 2009.
Queensland's CSG reserves are likely to be greater than Australian (conventional) natural gas reserves. Already, even though the industry is in its infancy, Queensland has become a net gas exporter to other states. Proposals are in train for major facilities geared to international exports.
The proposal by the Queensland Government to reserve a portion of the state's gas for domestic consumption would retard the development of the CSG industry. Moreover, notwithstanding its intent, such a policy would increase prices to domestic customers.
The proposal would add to the costs and risks of proving up sufficient reserves necessary to ensure an export-oriented project is bankable. In the process this would also mean a reduced availability of gas for domestic uses.
New CSG supplies require relatively little capital expenditure and can be brought on stream as needed. Because of the need for expensive liquefaction facilities and in view of the abundance of the reserves, the proposed regulation therefore serves no positive purpose but has a capability of retarding development and adding to costs.