Oct 2, 2017

We have enough cheap, easy-to-extract gas to last 100 years. There’s just one problem.

Australia has plenty of cheap gas. The problem is private companies are selling it all overseas, writes principal adviser at The Australia Institute Mark Ogge.

Hard to believe, isn't it? But it’s true: in the last decade, tens of thousands of square kilometers of Queensland farmland has been covered in gas fields. The export gas rush in Australia is one of the largest and fastest expansions of a gas industry ever seen, anywhere in the world. We are awash with gas. The problem is we are allowing almost all of the cheap and easy-to-get-at gas to be sent overseas.

The gas in some areas is close to the surface, in big reserves all together, where there are no bothersome farmers, aquifers or national parks in the way. That gas is relatively cheap to extract.

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16 thoughts on “We have enough cheap, easy-to-extract gas to last 100 years. There’s just one problem.

  1. Andrew Reilly

    How is it, that with all of this exporting of gas, that Queensland is only making royalty income of $194M/y (quoting a figure from Bernard’s article “Are Victoria and NSW etc.”)? That doesn’t seem like much to me. You won’t wind up with a Norwegian or Quatari-style sovereign wealth fund that way.

    1. Roberto

      Royalties in Qld are 10% of well-head value, minus depreciation etc. Well-head value probably (?) still that set by Howard in 2002 in his gas deal with China, which locked in low prices for 25 years.

      1. Peter Wileman

        ‘Honest John’, what a cost to Australia this man has been, and continues to be. Apparently this week is expected to be huge for property sales. Investors get the benefits of Capital Gain Tax concessions that ‘Honest John’ has left us with. Could be Golden Week for the Pollies to add to their portfolios too, and they ain’t going to change the concessions.

    2. old greybearded one

      An unconscionable act of treachery by J W Howard is the reason. Japan gets more in tax from Qld gas than Qld does.

    3. 20bsGi9t

      Dumb political decisions and if One was cynical, we would say likely corrupt. Australia could be setting aside revenue to fund future clean energy projects, instead we are helping the big multinationals to become richer, faster.

  2. graybul

    Government ‘rules’ . . . we the people deliver – OR ELSE!

  3. Roger Clifton

    It may well be considered expensive by current standards, but in the long-term it may become more expensive still.

    $10 per gigajoule is 3.6 cents per kilowatt hour in raw heat. If converted to baseload electricity, it would be 10 cents per kilowatt hour. That is the current ballpark for nuclear-supplied baseload electricity. Unlike gas, that would be carbon free baseload. (Wind cannot do baseload at all.)

    And that is before we get around to applying a carbon tax.

    1. Will

      Can’t renewables power pumped hydro to support baseload?

      1. Roger Clifton

        Will, someone has persuaded you that pumped hydro can provide baseload for the entire country. Where are the newly discovered mountains? Where are the unused rivers? Where are the dispensable ecologies that we can casually flood? Who are the manufacturers of the mud turbines that endlessly churn so much energy that there will still be some available in the disaster that no one had ever planned for?

        The article above uses arithmetic, figures can be challenged and checked, figures that are respected by accountants and engineers when they are right and can be corrected when they are wrong. However whoever promised you that pumped hydro can do it, did not show you the arithmetic to prove that it can.

        You’ve been had.

          1. Roger Clifton

            Will, having an address at the ANU only indicates a group in search of research funds. It does not mean that they have a project that could replace all of Australia’s emissions . You could push them to reveal their arithmetic, but all it would ever indicate is a token reduction in emissions. While there are good minded people silly enough to believe that token reductions are enough, such concepts will continue to get funding.

        1. steve colman

          The ANU numbers do stack up.
          Pumped hydro doesn’t need wild rivers. Just needs a reasonable drop from top of the system to bottom of the system – the water just keeps being recycled!
          There are thousands of suitable locations. Just needs some leadership to put it in place.

          1. Roger Clifton

            Good for you, Steve, in agreeing that numbers matter. Numbers can be checked, corrected and updated. However we are not seeing enough numbers to describe a system that could completely backup 100% renewable electric supply for Australia. Without that description, my challenge stands – that the concept can only ever provide an excuse for inaction.

            So far you said it can be done without damming wild rivers. Okay, where are these other high and low volumes if they are not valleys in hilly country? And if water only needs to be recycled from place to place, it will still evaporate continuously throughout the dry season, and need equally continuous freshwater supplies. So those valleys must have year-round running rivers in them. Wild rivers, to be drowned in a pretense of rescuing the environment.

    2. AR

      Dodger has kept his nukes Tourette’s in check lately but it always breaks out.

  4. Woopwoop

    A good article – explains the situation clearly.
    That analogy of the leaking bucket should be used in advertising; it’s easy to understand, and that’s what convinces people.

  5. Dog's Breakfast

    Those LNG plants in Qld are going to cost us our future, and Labor was well part of those decisions and has to take responsibility. CSG is a dead end, the worst of all possible gas extraction methodologies.

    On the bright side though, this will mean that we will have to wean ourselves off gas as it will soon be too expensive, as Roger points out, almost as expensive as nuclear, and that is the worst route of all.

    So ultimately this might help us make the case for a nation powered by renewables, including pumped hydro, which has been studied by ANU and requires only about 12 out of the 22,000 identifies sites to be actually implemented.

    How are those numbers holding up? Well, better than any alternative.

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