Tuesday, January 26, 2021

The freedom of the press still furnishes that check upon government which no constitution has ever been able to provide – Chicago Tribune.

Home Issue 50 Beetaloo $50m handout for frackers incites greenies

Beetaloo $50m handout for frackers incites greenies

A $50m Federal handout for frackers has raised the hackles of the environmental lobby but it receiving support from the NT’s CLP Senator Sam McMahon (pictured in a party promotion).

She says she supports the Coalition Government plans to accelerate gas exploration and development in the Northern Territory’s Beetaloo sub-basin “to create thousands of jobs, provide significant economic benefits to the region and ensure Australia remains a world leader in the production of natural gas”.

But Protect Country Alliance spokesperson Graeme Sawyer says: “Taxpayers’ cash propping up the polluting gas fracking industry in the NT … clearly shows is that fracking for gas is not economically viable without massive subsidies.

“Just yesterday, the European Commission proposed rules to restrict funding for LNG projects and instead funnel cash into low-carbon technologies to meet climate goals.

“Yet the dinosaurs in the Morrison Government remain ideologically in bed with the fracking industry,” Mr Sawyer said.

“Put money into any other industry in Australia and you’ll create more jobs.

“We know from other jurisdictions that when the fracking industry comes to town, it leads to a net decrease in job opportunities because it muscles out other industries and does not create the same jobs as, for example, agriculture.”

Meanwhile Bruce Robertson, LNG/gas analyst with the Institute for Energy Economics and Financial Analysis, says the funding “is a sink-hole which the gas industry itself isn’t even investing in”.

Senator McMahon is joined by Minister for Resources, Water and Northern Australia Keith Pitt who says he Government’s approach would speed up exploration and production in the Beetaloo basin by around two years.

“The Government will provide up to $50m for exploration that occurs before 30 June 2022, allowing the benefits of this important asset to be realised sooner.

“The funding will fast track drilling by providing grants to cover 25% of eligible exploration costs, capped at $7.5m per well and three wells per exploration venture.

“The Beetaloo Basin has been described as the ‘hottest play on the planet’ with the potential to be a world-class gas resource, transform the Northern Territory economy and generate 6,000 jobs by 2040.”

Says Senator McMahon: “The Northern Territory’s Geological Survey estimates the sub-basin could hold more than 200,000 petajoules of gas.

“Even if only a very conservative 10% of that gas was recovered, it could still supply Australia’s domestic gas demand for more than 10 years.”

18 COMMENTS

  1. This is sheer lunacy. The Great Artesian Basin should be declared sacrosanct, subject to the strictest control over the type of drilling that the short term gas chasers envisage.
    They don’t have the slightest idea of what they are doing and we will live to regret this wastage of taxpayers funds. Gas is not the answer to our needs.

  2. I hope someone has an alternative water (potable) source available already and lots of it.
    Is the real and unknown risk to the water, worth it for gas? I vote no.

  3. Fracking in the NT is wrong on so many fronts and the Morrison / Gunner governments’ support for the industry is truly stupefying.
    In a story in today’s Guardian (“Zero return: government savaged over taxpayer grants to open up new gas basin in Australia”), gas analyst with the Institute for Energy Economics and Financial Analysis, Bruce Robertson, is quoted as saying that there was at least $11 billion in gas assets for sale in Australia, with major energy companies struggling to find buyers.
    He also noted that “the NT was a remote market unlikely to produce cheap product unless it was heavily subsidised”.
    Let’s all hope that financial reality will provide the knock-out for fracking that I believe the majority of Territorians want and that the so-called “gas-led recovery” is finally exposed for the mirage that it is.

  4. This is a sound investment in the future of the NT.
    The mining industry gives the NT Government $500m in royalties a year and employs thousands of Territorians including Aboriginal Territorians.
    The gas led recovery is not a mirage and some of the gas is hydrogen, with zero emissions.
    We are blessed with some of the biggest gas resources in the nation and the cost of production is low.
    Companies are not waiting for handouts, Santos and Central Petroleum are investing millions.
    Credible sources such as Australia’s Chief Scientist and the Chair of the Energy Security Board have shown that gas will be an important transitional fuel for renewables.

  5. No, this is a risky waste of public money which Territorians don’t back.
    The gas industry is one of the least labour intensive industries in Australia. COVID-19 recovery spending should focus on jobs-rich industries, but research shows gas is among the very worst options for creating jobs. Investing recovery funds in virtually any other industry would create more jobs.
    Claims of high royalties to be by gas companies can’t be trusted. The closest example we have is Darling Downs where large scale CSG gasfields have failed to generate the large royalties promised, the forecast royalties are now only 1/4 of what was initially predicted. ACIL Allen in their analysis of the economic context for shale as in the NT, estimates that royalty payments from the most likely NT shale gas development scenarios would be very small.
    Fracking the Beetaloo would create negligible economic benefit for either state coffers or job generation, at the cost of widespread environmental damage, risk of contamination of the water supply for many rural and remote communities, and a 22% increase to Australians greenhouse emissions (from both the gas itself and the methane released during its extraction).
    It also sets a bad precedent of doing something that is clearly unwanted by the majority of communities living in the affected area (both First Nations and farmers) and by the majority of Territorians.
    The Feds are in bed with the gas companies, you don’t have to look far into it to see the financial relationship between the Libs, especially Angus Taylor, and the gas industry. There is no other logical reason for this obsession with chucking money at fracking.

  6. @ Hannah. But what would the cost of using non gas options be?
    Billions.
    Would companies pay for this investment?
    No!
    The cost of non gas alternatives would be high because of the huge capex involved.
    It makes environmental sense to use solar and wind but not economic sense.
    The NT is already beyond broke.
    Gas versus wishful thinking sums it up.

  7. Subsidising more gas will not bring down energy prices. Subsidising gas will lock in increased emissions and displace the renewable energy we need to reduce energy cost by building alternatives to gas for households, businesses and industry.
    The CSIRO’s annual report on energy generation costs has for the last three years said that
    “while existing fossil fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest-cost ways to generate electricity for Australia, compared to any other new-build technology.
    “At a global level, the investment costs of a wide range of low emission generation technologies are projected to continue to fall, and we found new-build renewable generation to be least cost, including when we add the cost of two or six hours of energy storage to wind and solar.”
    The Federal government have to follow the lead of almost all other OECD countries and commit to subsidising the transition to renewables ASAP.
    It will be cheaper in the long run and avoid the problem of large stranded assets due to the major importers of Australian gas all having committed to moving away from fossil fuels.

  8. @ Hannah. Gas ain’t gas.
    Our local Central Australian gas company CTP sees its future in Helium.
    Gas companies are going carbon neutral.
    Santos will be net-zero emissions by 2040 in support of Australia’s commitment to the Paris Agreement.
    Gas will not bring down energy prices?
    Exploiting a huge natural resource is dearer than building solar and wind, backed by diesel and/or battery storage, from scratch?
    The market doesn’t think so.
    Santos just announced a binding long-term LNG Supply and Purchase Agreement for the supply of LNG from the Barossa project.

  9. @ Mining Investor. CTP and helium? I thought that was for blowing up balloons and they are being phased out like single use plastic.
    The rest of the world is talking about hydrogen and Australia has great prospects there including in the NT.

  10. Anyone who has ever been onsite at a gas field should know once built, not a great number of jobs. Monitoring and maintenance. 1000s of jobs. Sounds good, doesn’t it, by people selling it.
    Doesn’t. Most of Oz gas get sold offshore, governments didn’t request a reserve for national interest be kept annually did they? Probably why there is a shortage nationally. Prices and demand.
    As far as I know one government did. About time Government starts realising once all the nations minerals and gas gets sold offshore, Australia in trouble. Higher taxes on these companies to build long term infrastructure.
    Royalties? Maybe, maybe not as much as you think.
    Look at all the money that NT got from uranium.

  11. @ Mining Investor: Our local Central Australian gas company CTP sees its future in Helium.
    Local? CTP is headquartered in Brisbane. Traditional owners of the land on which CTP’s Mereenie wells are located receive ~ $45 per person per year in royalties. The profits flow elsewhere. There’s nothing local about CTP except the wells sited here and the social risks and environmental degradation they cause.
    Gas companies are going carbon neutral.
    Carbon neutral and net-zero ambitions for decades ahead are deceptive terms premised on the assumption that fossil fuel emissions can be compensated for by carbon offsetting and unproven future technologies for removing carbon dioxide from the atmosphere.
    By relying on trees and unproven technologies to suck carbon dioxide from the air to compensate, companies like Origin, Santos, and CTP can continue to pump out greenhouse gases.
    Net-zero plans that rely on promises of future carbon removal – instead of reducing emissions now – are, therefore, placing a risky bet.
    Gas will not bring down energy prices?
    No. A global gas supply glut has caused gas prices to bottom out. LNG prices in Asia are at 10-year lows. And yet prices in Australia remain stubbornly high.
    The Australian Competition and Consumer Commission has done a substantial body of work since 2017 showing that, for long periods, Australian consumers pay more for gas than our Asian export customers.
    Since 2014, gas production has tripled on the east coast of Australia. Prices have also tripled. More gas production will not solve the price problem.
    Exploiting a huge natural resource is dearer than building solar and wind, backed by diesel and/or battery storage, from scratch?
    Yes. Expanding gas production in Central Australia and the Beetaloo Basin is not just a matter of “unlocking” natural assets waiting there to be exploited.
    It involves expensive taxpayer-subsidised pipeline projects such as Central Petroleum’s proposed Amadeus to Moomba gas pipeline costing at least $1.2 billion and risks leaving the Northern Territory with a messy patchwork of stranded and decaying assets in decades to come as the world moves away from fossil fuels.
    As fracking firms in the US go bankrupt amid a global price war and falling demand, unprofitable wells are being abandoned even as they continue to release planet-warming methane gas, leaving an enormous bill for taxpayers there to foot.
    It doesn’t take much foresight to see the same thing happening here.

  12. @ Richard E Bentley: Richard, yes Helium. There are many other necessary uses for it.
    (I am assuming your “Balloons” was tongue in cheek.)
    CTP are looking for Natural Gas, Oil and Helium.
    @ Watchin: That’s where Statistics are wonderful. CTP quote and increase in local employment of 30%. (From 21 staff to 30) in one of their earlier presentations.
    Yep, unfortunately we don’t keep gas or fuel in reserve for our use, so hopefully something doesn’t happen where we really need it.

  13. @ Jorgen Doyle: A lot of what you say makes sense. I am curious about the $45 royalty payment. Whilst it doesn’t seem a lot, factors like how many people are paid this and what is the overall royalty payment as a proportion to the net profits of CTP need to be taken into account.
    Furthermore my opinion is that is the governments that make the rules. It’s unfair to blame the company for things that are deemed lawful. Therefore it is the government who should be copping any flack and where the company breaks the law, they should be prosecuted.

  14. @ Jorgen Doyle: CTPs current operations eg in the Amadeus Basin, do not involve fracking.
    I agree that Beetaloo should not go ahead.
    CTP profits flow elsewhere?
    I’ve held CTP shares for a decade and never received a dividend.
    There are no profits.
    CTP have $23m in cash and are $46m in debt.
    CTP may be headquartered elsewhere but Alice Springs is their hub and almost all their employees are right here in the NT.
    Australia’s east coast gas market is under-supplied, with shortages predicted as soon as 2024.
    Central Petroleum is playing a key role in satisfying this demand from its portfolio of NT assets.
    Why is there a huge demand for gas?
    Because to generate the same power from wind or solar would cost many times more in capital costs.
    Without gas as a step towards carbon neutral many businesses would simply close.

  15. @ Mining Investor: Is that really true, CTP has $23m in cash and $46m in debt?
    If it is so unprofitable, how does it keep going then. Seriously.
    Tax minimisation and generous government rebates possibly.
    Like most mining.
    You have never received a dividend for CTP shares.
    Well, you must have a very long term investment view that one day they will turn a profit then, hey, looking for capital gain? Looking for the pipeline to SE maybe?
    East coast gas gets mostly shipped straight offshore with long term contracts. Domestic use seems to be a very low priority by government and levers should have been created to negate that.
    Another point, the long term game is renewables.
    Start looking at the number of homes that have solar now.
    With the vehicle industry moving in the same direction.
    Think Porsche etc.
    Beetaloo should never go ahead.
    Accidents happen. Can you guarantee for years and years into the future that there wont be a failure of a well or infrastructure?
    These holes and chemicals are passing through or near water layers.
    If it does go ahead, OK, if it is so good and profitable and we must have it. NO government money handouts.
    Rebates etc. $50m could have been spent on hospitals or other needy areas, not frackers.
    Royalties, I will be amazed if we actually see any of the predicted royalties from these schemes.
    Already desperate NT government looking to dig itself out its hole will green light it though.

  16. @ Observing: All the talk about taxpayer subsidies and rebates and concessions is misguided.
    The mining industry contributes more than half a billion dollars to the NT Govt each year and employs thousands of Territorians.
    The NT is broke and we desperately need that money and the jobs.
    Yes the long game is renewables but meanwhile businesses need cheap power and the cheapest and cleanest available without spending billions we don’t have is gas.
    CTP will soon be selling helium which is in high demand internationally and should be very profitable.
    Hopefully they will finally pay a dividend to shareholders.
    Helium is not a greenhouse gas and more of it in the atmosphere would have a cooling effect.
    Agree that Beetaloo should not go ahead but it is not a CTP asset.
    Yes CTP has been a poor investment.

  17. @ Mining Investor: Your own company chairman on the subject of East Coast gas prices.
    Liveris lying again? Cheap gas is unrealistic, warns Origin Energy director Mick McCormack
    The Australian, 11 January, 2021.
    Newly appointed Origin Energy director Mick McCormack has ridiculed a cheap gas target on the east coast as unobtainable, lashed the prospect of further regulatory intervention in the energy sector and called for bipartisan support for net zero emissions by 2050.
    Former Dow boss Andrew Liveris — who advised the government‘s National COVID-19 Co-ordination Commission on how manufacturing could help lift the economy out of the pandemic — initially set a $4 a gigajoule target earlier this year, though more recently suggested a $4 to $6 goal. Producers say a price of at least $8 a gigajoule is realistic.
    Mr McCormack, the former boss of gas pipeline giant APA, said $4 was an unrealistic goal.
    “Some of these prices I’ve heard being kicked around makes me think someone’s been smoking something,” Mr McCormack told The Australian. “It just makes no sense in that you start to talk about $4 to $6 gas, that then becomes part of the conversation as though it’s got some serious legs to it. It’s not happening.”
    Energy users say they can’t find gas on a contracted basis for less than $8 to $10 a gigajoule, more than double historic levels, which could force some manufacturing facilities into importing products rather than making goods in Australia or even shutting their doors.
    Mr McCormack stepped down from APA in 2019 after 15 years in the top job and has picked up several director positions including the Origin board role while also becoming chairman of Northern Territory gas junior Central Petroleum.
    A move by both state governments and companies including Origin to achieve net zero emissions by 2050 has also picked up pace this year, although the Morrison government has so far held off committing to the same target. Achieving bipartisan support on emissions cuts was essential for Australia to decarbonise the economy, he said.
    “We‘ve got ourselves in a bit of a mess in the energy industry at the moment. Everyone wants to move to a cleaner energy future — even in the bush where I am, everyone does — but we need to have a bipartisan approach. The debate is just so polarised,” Mr McCormack said.
    “Where we are as an industry is you have a government that’s refraining from putting a target out there of zero emissions by 2050 for obvious reasons.
    “But you have an industrial landscape that’s slowly but surely starting to put targets on by 2050. One company after another is heading towards that direction.
    “And the issue for companies like Origin is they have to make investments to get on that transition path. And you’re making investments against some policy uncertainty. So it’s take a deep breath territory.”
    A Grattan Institute report largely rejected the Morrison government’s plan for a gas-led economic recovery, saying it will fail to lower prices or stimulate manufacturing jobs.
    Grattan calculates Australia’s major gas-reliant manufacturers employ just 10,000 people and account for 0.1% of the national economy, at odds with Mr Liveris’ estimates of 700,000 jobs in the energy-intensive gas-based industries.
    Mr McCormack said the government needed to be upfront about their intentions with subsidising the manufacturing industry. “I can see where the government is coming from but … the government is saying we are going to have private sector companies subsidise some small component of manufacturing. Again, if you want to do that, let’s be upfront and open about it.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here