Article by Colin Packham, courtesy of The Australian
Senex Energy’s $1bn Atlas project, one Australia’s first large-scale gas developments to come online in years, will deliver its first supplies to the market within a week – as joint owner Gina Rinehart said the project’s delays were indicative of Labor’s attempt to kill Australia’s resource sector.
Additional gas to Australia’s east coast market is a major boost to the energy sector and the broader economy amid a looming supply crunch.
The Australian Energy Market Operator earlier this year warned the country’s gas power stations could be forced to burn diesel to ensure sufficient electricity supplies as early as next year.
The eventual delivery of 60PJ of gas a year – enough to meet approximately 10 per cent of the needs of Australia’s east coast – is a major relief to industry.
It comes amid worries supply shortfalls would threaten the viability of heavy manufacturing and heighten cost-of-living pressure on households.
While new supplies are a welcome boost, the project has suffered a series of delays that increased its development costs, due to Labor’s 2022 intervention in the market that continues to alienate Mrs Rinehart. Extending her stunning rebuke of the government, Mrs Rinehart said the project was a rare example of inward investment in Australia as would-be investors were deterred by Labor’s deliberate attempt to sideline the resource sector.
Wearing a sign echoing Donald Trump’s “drill baby, drill,” Mrs Rinehart on Sunday joined a chorus of prominent corporate heavyweights urging action to bolster the country’s economy. “Our investment will triple Senex’s production from 2022 so we can supply the gas that Australia needs, and will need in my view for a very long time,” she said.
“If we don’t bring in sensible policies to turn the investment flow back to Australia … it means yet more lowering of living standards, more record business closures, projects being delayed with the greatest burden of government … regulations our country has ever seen and 80 per cent of resource projects becoming the causalities.”
Mrs Rinehart co-owns Senex alongside South Korean giant POSCO.
The scathing criticism of Labor escalates Mrs Rinehart’s recent rebuke of the government. Her criticism has been emboldened by the election of Mr Trump on a platform of significantly bolstering fossil fuel production, which the Hancock Prospecting chair has urged Australia to replicate.
While Mrs Rinehart is a frequent critic of Labor, even more traditional measured voices are sharpening attacks on Labor’s apparent reluctance to move quickly on bolstering gas supplies.
Labor insists it values gas and its role in manufacturing and electricity generation, but a spate of projects remain on the sidelines, awaiting the green light from authorities – a situation stoking scepticism about the government’s commitment to the industry.
Queensland shapes as the jurisdiction most open to new gas developments, a fact acknowledged by Senex’s founding chief executive, Ian Davies.
“We are again seeing Queensland continue to do the heavy lifting in natural gas production. This $1bn expansion demonstrates what can be achieved when industry, government, regulators, landowners, community and suppliers work together to unlock critical resources,” he said.
Although Queensland appears open to new gas developments, industry figures have warned there is a limit to the capacity of the state to save NSW and Victoria. A pipeline that runs south from Queensland regularly runs at above capacity and a planned expansion of the infrastructure was delayed by federal Labor government intervention.
Labor insists it was forced to act to implement a cap on gas of $12/GJ on new developments amid a global energy crunch, but critics insists it was symbolic gesture that has ultimately proven ineffective in lowering prices.
Senex’s Atlas expansion was one of those projects delayed as the company warned that without a domestic market exemption, the economics of the development would be difficult.
Labor eventually issued the exemption but the project remained held up as it awaited environmental approvals.
Buyers of Senex’s gas had worried about potential delays, which would have forced users to either seek alternative supplies or reduce their operations. Buying alternative gas on the spot market would have been prohibitively expensive.
