Full price disclosure on domgas: NCCC

THE news around the National COVID-19 Coordination Commission's plans for a “gas-fired’ recovery in the press so far, including here, have largely touched on pipelines, removal of red and green tape, and getting rid of existing onshore moratoria in the southern states. 
Full price disclosure on domgas: NCCC Full price disclosure on domgas: NCCC Full price disclosure on domgas: NCCC Full price disclosure on domgas: NCCC Full price disclosure on domgas: NCCC

More pipeline oversight one key feature of NCCC's gas-fired recommendations

Helen Clark


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The taskforce wants more manufacturing, and understands gas is key to that and in turn cheap gas will matter. Hence the drive to commercialise more of it by Canberra begun long before the COVID-19 bug really bit. 
The full text has been published by The Guardian today. 
Outside of ending moratoria its areas of focus for development are the Beetaloo Sub-basin in the Northern Territory, the Perth Basin, the Bowen Basin in Queensland, and Narrabri, which is not a basin but Santos' long awaited CSG development. It is the only company project named by the taskforce though head Neville Power is a non-executive director of Perth Basin player Strike Energy. 
"This will require a removal of regulatory barriers as well as access to development capital to avoid potential shortfall as there is a real risk of insufficient investment due to current low oil prices," it said. 
However there is plenty else, such as hopes for Henry Hub level pricing, a more liquid futures market, and full price transparency and disclosure to drive investment and healthier markets. 
That last recommendation is one manufacturers and other gas buyers have been seeking, and at times crying for through the years since east coast gas price shot from $3-$4 per gigajoule into double figures. 
Now, it wants US-style Henry Hub equivalent pricing in domestic gas market positions, which it   calls a credible goal. 
The report says 40% of east coast production and 20% of west coast production forecast through 2029 are already below $4/GJ ex-field, using Rystad Energy data. 
It said all domestic gas must be subject to "price disclosures and oncost linked back to 1-2 well connected hubs Wallumbilla and Moomba". 
This will be "essential" for creating the kind of transparent market that is currently absent, but needed. 
To do this, existing settlement infrastructure established by the Australian Energy Market Operator at Wallumbilla and Moomba could be used. 
This would enhance both transparency and increase volumes. 
It recommends more pipeline regulation, and rates of return on par with North America of around 4%-8%; some unregulated and "semi-regulated" pipelines would be moved to a more regulated model. 
Those explorers in frontier basins should collaborate on infrastructure to reduce doubling up. 
States would control pipelines in their own territories but those spanning borders would be subject to some federal oversight. 
The government should establish an "evergreen task force between AEMO and the ACCC to manage implementation and send clear market signals via aligned basin and pipeline prioritisation". 
This would be published and refreshed regularly. 
It notes that over the past 10 years US gas producers reduced cost by over 60% and over 15 years by 75% though doesn't elaborate on whether its assumption is based on the associated gas from oil production (responsible for Victoria's historically low gas prices) or directly from gas basins. 
It also wants to help the service providers and "promote scale in basins" noting the "the US experience curve in shale gas was first driven by robust oil-field services sector and small players rapidly experimenting and applying their learnings but the true efficiency of the past decade bas been driven by scale in-basin". 
Given Australia's smaller size this is usually done via work in both LNG and domestic gas. 
Reduction in "red and green tape" could save producers up to 30% of costs, also. 
It wants to "provide low cost capital to small and mid cap players, prompt current field development and avoid a supply-demand imbalance in 12-24 months time; target basins with infrastructure to connect to markets, and consider incentives to ensure there is bridging supply available as we come out of this low oil price crisis."
New east coast or Northern Territory developments could be subject to domestic reservations, with Western Australia as the model. 
This is not a new idea, former resources Matt Canavan was discussing this and enacting "use it or lose it" laws around retention leases back in 2018, which the NCCC also suggests. 
GeoScience Australia could also partner with operators in drilling the Beetaloo, "taking a more active role to advance development with cost recovery from basin participants". 
Government could also "underwrite supply at priority supply hbs to "create the market" and allow participants to trade around the position". 


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