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Speaker 1: There's an article in The Australian Today suggesting well, in

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Speaker 1: fact not suggesting this has happened. As Peter Dutton announced

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Speaker 1: his nuclear policy for the next federal election. The Australian

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Speaker 1: Energy Market Operator AEMO has published an update on gas

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Speaker 1: supplies in the country and it suggests there's an imminent

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Speaker 1: threat to the supply of gas along the East Coast

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Speaker 1: of Australia and into South Australia. Of course the threat

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Speaker 1: notice that they have put out East Coast gas system

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Speaker 1: risk and it's because of the cold weather all as

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Speaker 1: if we don't have that every winter, gas supply and

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Speaker 1: storage interruptions, ongoing lower wind power contribution coinciding to create

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Speaker 1: an imminent risk of gas shortages. The person behind the

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Speaker 1: articles brought this to our attention is doctor David Close,

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Speaker 1: who's director of the Gas and Energy Transition Research Center

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Speaker 1: at the UNI of Queensland, and he joins me now, David,

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Speaker 1: good morning.

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Speaker 2: Good morning, Matthew, thanks for having me on.

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Speaker 1: Thank you for your time. It sounds dire, imminently dire.

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Speaker 2: Look, I think I go to a very good job

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Speaker 2: of cautiously forecasting when risks are going to manifest in

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Speaker 2: a material way. In the real physical world, and so

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Speaker 2: that is what this notice is. But it is definitely

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Speaker 2: a next level of alert. We've already been on alert

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Speaker 2: for a number of months or years with the updates

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Speaker 2: both the gas statements of opportunity and the integrated system

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Speaker 2: plans that a published. And I think this is the

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Speaker 2: first imminent shortage warning that we've seen at least for

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Speaker 2: some time while I've been management a situation, and you

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Speaker 2: summarize it well in regards to lower weather, lower wind outputs,

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Speaker 2: We've had some interruptions and the gas supply, but overall,

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Speaker 2: the thrust of the article I wrote was that some

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Speaker 2: of our world class gas supply resources in the Southern

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Speaker 2: State are in decline and it's very hard to fight

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Speaker 2: that decline, and demand is only managed reducing less than supply,

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Speaker 2: and so we're heading for a mismatch in supplying demand.

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Speaker 1: Okay, how do we get to the situation when this

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Speaker 1: country is floating on gas?

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Speaker 2: Yeah, Look, it's a really good question. Gas, Like a

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Speaker 2: lot of commodities, it's where it is that matters a lot.

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Speaker 2: So ofviously, in the Northwest Shelf of Australia is a

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Speaker 2: world class gas gas exporting region has been for a

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Speaker 2: couple of decades. For the last decade or so, Queensland

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Speaker 2: has been an exporting jurisdictions and supplies a lot of

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Speaker 2: the Asian demand for liquefied natural gas. In the southeast.

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Speaker 2: There's been an almost embarrassment of riches since the sixties

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Speaker 2: with the gipps Land Basin being a well class basin

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Speaker 2: that's produced over ten trillion cubic featy gas and looks

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Speaker 2: that may not mean a lot to everyone, but I

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Speaker 2: can tell you it's a lot of gas and it's

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Speaker 2: also produced billions of barrels of oil. So it's been

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Speaker 2: a real boom for Victoria in terms of manufacturing, industrial use,

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Speaker 2: residential and commercial use. It's been abundance and it's been

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Speaker 2: relatively cheap for decades. Now that world class baseline Gippsland

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Speaker 2: is in decline and along for gas planting less gas

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Speaker 2: gas thought that way can take up some of the slack,

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Speaker 2: so that way basin produces gas into the Victorian and

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Speaker 2: South Australian markets as well, and of course South Australia

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Speaker 2: has the Trooper Basin in the north of the state

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Speaker 2: and that supplies gas to the market as well. But

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Speaker 2: that's also a fifty year old basin LT's well classed.

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Speaker 2: It is also arguably in decline. So it's a matter

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Speaker 2: of the supply that's been so reliable for so long

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Speaker 2: being in its natural state of decline as you've expected,

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Speaker 2: it's been forecast for a number of years.

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Speaker 1: Okay, one question before I get to the obvious one,

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Speaker 1: which is just to give you advanced notice, why is

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Speaker 1: it that we don't have a policy to save gas

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Speaker 1: for Australians first, or to use it Australia first. And

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Speaker 1: all the contracts we have overseas to Asia we put

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Speaker 1: on hold and they get what's left. What we don't need,

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Speaker 1: you can have, it's all yours. Well we'll take money

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Speaker 1: for it, we'll sell it, but we get what pre

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Speaker 1: bit we get supplies first, none of this shortage nonsense.

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Speaker 1: Given it's our gas and we pump it up and

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Speaker 1: then we decide to sell it overseas first, Australia second.

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Speaker 1: But before we get to that, is there an issue

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Speaker 1: with exploration, with looking for new places to tap into gas?

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Speaker 2: Yeah? Absolutely. I think some states have managed to find

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Speaker 2: a balance where there have been has been ongoing exploration

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Speaker 2: and new development projects coming online. So Queensland South Australia

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Speaker 2: really is to speak to anyone about doing projects in

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Speaker 2: South Australia, and people speak really positively about the regime

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Speaker 2: there under both both sides of politics. That's not a

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Speaker 2: part ofsan issue. You can get renewable projects up, you

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Speaker 2: can get mining projects up, you can get gas projects up.

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Speaker 2: So South Australia really set the high watermark in terms

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Speaker 2: of performing in this area. But Queensland and Western Australia

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Speaker 2: Northern Territory have a pretty good track record also. Look

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Speaker 2: not to cast a surgeon specific governments, but I think

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Speaker 2: it's obvious to anyone who watches that Victoria and New

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Speaker 2: South Wales haven't seen success in moving projects from the

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Speaker 2: top or the whiteboard into actual development. And eventually that

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Speaker 2: catches up and we see the other week the first

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Speaker 2: gas production license in Victoria I think for a decade

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Speaker 2: with Beach's Enterprise project coming online, and that's an important

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Speaker 2: extra source into Victoria, but it's not enough to replace

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Speaker 2: that supply we've talked about from Gippsland basin. So the

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Speaker 2: lack of exploration has led to a lack of new

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Speaker 2: development and that's contributing to this gas in supply.

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Speaker 1: Okay, to the other question, then why don't we have

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Speaker 1: a reservation policy? And I understand there are constitutional restraints

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Speaker 1: on free trade between states, but surely all that is

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Speaker 1: manageable somehow, Well, I thinks a good So.

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Speaker 2: I'd say two things I mine answer to start within this.

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Speaker 2: In this instance, a reservation policy wouldn't and won't help

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Speaker 2: a lot unless other things happen to If there's increased

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Speaker 2: pipeline transports of gas between primarily Queensland to South Australia Victoria,

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Speaker 2: New South Wales, perhaps in a reservation policy has the impact.

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Speaker 2: Or if the substantially more gas storage in the southern States,

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Speaker 2: then perhaps a reservation policy has an impact. But as

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Speaker 2: it stands, if we reserve more Queensland gas, and let's

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Speaker 2: be clear, Queensland's the only space it's likely to have

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Speaker 2: any kind of gas surplus on a systematic month on

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Speaker 2: month kind of time frame, Victoria will on warm days

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Speaker 2: and days when they don't need a lot of gas

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Speaker 2: generation potentially, but it'll be stuck in Queensland and that

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Speaker 2: won't help. The key problem in front of Victoria and

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Speaker 2: New South Walescouth Australia is what we call this peak

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Speaker 2: demand day problem. Where a lot of gas is needed,

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Speaker 2: or two or three days at a time during a

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Speaker 2: cold winter snap when sun solar resources are low and

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Speaker 2: we're going through a bit of a renewable drought or

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Speaker 2: a wind drought when there's lower wind resources available. So

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Speaker 2: the reservation policy doesn't solve that part of the problem.

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Speaker 2: I think to your broader question, we're a free trading nation.

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Speaker 2: We have been for decades. We've brought tariffs down, We've

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Speaker 2: gone through the painful growth process. The industries, like our

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Speaker 2: car industry, expectively die. We support the broader de carbonization

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Speaker 2: of Asia with Australia gas and it is importance as

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Speaker 2: a really important contribution. We can do both. We should

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Speaker 2: be able to supply domestic users and we should be

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Speaker 2: able to supply our trading partners. We've invested heavily in

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Speaker 2: the sector of Australia to bring more gas apply to market,

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Speaker 2: and just on that point, we wouldn't see the volumes

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Speaker 2: of gas in Queensland without the billions tens of billions

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Speaker 2: of dollars of foreign direct investments to bring some of

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Speaker 2: what might have been otherwise marginal resources to the market.

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Speaker 2: So Queensland, by developing their resources, have really helped the

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Speaker 2: use case substantially, and just.

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Speaker 1: As well they have, but we're still in the position

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Speaker 1: of a email saying potentially we could run out of gas.

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Speaker 2: It is pretty dire. I mean, it's hard to imagine

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Speaker 2: a country with our natural resources, our governance, our free markets,

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Speaker 2: and I think it speaks to you know, decades probably

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Speaker 2: of a real lack of energy policy. And this is

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Speaker 2: at the state and federal level. It's both sides of politics.

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Speaker 2: I'm not pointing seeing as anybody in particular here, but

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Speaker 2: collectively we have zombie walked our way into looming shortages.

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Speaker 2: I'm not sure if the embarrassing is the right word,

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Speaker 2: but it's going to have real world consequences, and it's

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Speaker 2: a very short list of very difficult options to try

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Speaker 2: and avoid them, to avoid the worst of it.

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Speaker 1: At least, I reckon the federal government will know all

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Speaker 1: about it when people wake up the cold showers.

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Speaker 2: Look, I think the Future Gas Strategy to speak positively

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Speaker 2: about what Minister King was able to do in what

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Speaker 2: I'm sure was a challenging environment to bring the with

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Speaker 2: her department, to bring the Future Gas Strategy forward, and

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Speaker 2: I've seen a lot of commentary saying that it's some

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Speaker 2: court of arms to expand Australia's gas industry, when really

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Speaker 2: what we're talking about is trying to keep the lights

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Speaker 2: on while we transition. There's no good for anyone if

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Speaker 2: we start running out of gas in Victoria and New

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Speaker 2: South Wales in particular, because we haven't managed to apply

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Speaker 2: while we go through this critical transition period.

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Speaker 1: I want to just ask you about reports, and I'll

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Speaker 1: be talking about this with Monash Institute shortly, but reports

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Speaker 1: that if we do see the election of a Dutton

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Speaker 1: government and they move towards nuclear and ease off the

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Speaker 1: push on renewables, it could push the price of the

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Speaker 1: energy bill up by five hundred to one thousand dollars

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Speaker 1: per year. What do your instincts tell you on that?

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Speaker 2: Well, I think the complexity of forecasting future energy supply

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Speaker 2: is difficult, and then forecasting future energy costs materially more

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Speaker 2: difficult on top of that. So AMO do a very

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Speaker 2: good job of publishing the ISP and we can use

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Speaker 2: that to try and make inferences of that cost. So

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Speaker 2: they haven't done one but nuclear, which is very understandable

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Speaker 2: because currently it's not legal. So I think it would

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Speaker 2: be beneficial for the debate for that to be total

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Speaker 2: transparency around what different options might be, and how they

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Speaker 2: might be costed, and how important they might be in

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Speaker 2: the back half of this century. Gas will be very

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Speaker 2: important for thirty forty. However, many decades I don't know,

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Speaker 2: but at some point it will be more and more

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Speaker 2: difficult to continue to use gases a supplier of last resort.

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Speaker 2: And we're really so focused on twenty fifty. Our worry

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Speaker 2: where we're not really sitting ourselves up for success on

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Speaker 2: a generational timescale, So prices could go up, you know,

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Speaker 2: for a generation while we build massive new resources to

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Speaker 2: supply electricity. I think it's difficult to see that not

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Speaker 2: being the case. But in the future we could have

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Speaker 2: lower operating costs with either renewables or with nuclear under

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Speaker 2: certain assumptions and certain scenarios. And that's not to try

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Speaker 2: and stake a flag in either camp.

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Speaker 1: David, I really appreciate your time this morning explaining all

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Speaker 1: of that, but imminently so when they say imminently, what

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Speaker 1: are we talking about months, Look, some of.

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Speaker 2: These inputs are difficult to predict. Gas plants are relatively

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Speaker 2: complicated facilities, and part of what we're seeing is the

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Speaker 2: issues I think hopefully very short term and temporary at

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Speaker 2: Iona Gas Storage Actilly, which is really important facility for

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Speaker 2: gas storage obviously and the long for gas plant. Can

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Speaker 2: imagine with plants that when you have difficulties with equipment

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Speaker 2: or potentially subsurface issues that they're not trivial to solve.

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Speaker 2: I'm sure the companies will share more details once they

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Speaker 2: get the opportunity, and hopefully they can get whatever issues

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Speaker 2: there are resolves in the near term. We don't see

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Speaker 2: a hard landing for Victorian households. The medium term issues

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Speaker 2: are the ones we talked about earlier, and they're a

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Speaker 2: bit more systemic and can require some deeple thinking.

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Speaker 1: Indeed, well not here in South Australia either. Thank you

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Speaker 1: for your time.

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Speaker 2: No thanks, matthew N.

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Speaker 1: I speaking to you likewise, Doctor David Close, Director Gas

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Speaker 1: and Energy Transition Research Center, UNI of Queensland,