Blame coal seam gas for price hikes. It is more expensive to produce
MEDIA RELEASE – 28 April 2017
The cost of producing coal seam gas at Santos’ Narrabri project will be almost double the production cost of conventional gas in Bass Strait according to the Australia Energy Market Operator, and will be unlikely to reduce the price of gas in the domestic market. It is the drive into unconventional gas and the cartel dominating the gas market that has led to the massive price rises.
Unconventional gas is more expensive to produce due to the large amount of salty water that must be extracted to depressurise the aquifer and the large number of wells and associated infrastructure that must be drilled and fracked.
The Core Energy Group report commissioned by AEMO in February 2015 found:
- Bass Straight conventional gas production cost – $4.05
- Cooper Basin conventional gas production cost – $5.30
- Narrabri coal seam gas production cost – $7.25
NSW Greens energy and resources spokesperson Jeremy Buckingham said:
“The cost of producing coal seam gas is far more expensive than conventional gas and was only made financially viable by the push into exports and the associated price hikes.”
“The current ultra-high gas prices are the result of letting a cartel loose on a vulnerable market. The only way to fix it is to place controls on the cartel to stop it extorting its market power.
“Now that sensible regulation of the gas market has begun to be applied, it will be even less politically palatable to force fracking down farmers’ throats. Australians will rightly want stronger regulation of the gas market rather than has their community turned into a gasfield to prop up the profits of big gas companies that made poor investment decisions or signed bad contracts.
“Prime Minister Turnbull’s push to help the gas companies force their way into fracking more expensive unconventional gas will be rightly rejected by the community and state governments who do not want to lose office. Coal seam gas does not have a social licence.”