Security blueprint needed for Australia's energy supply grid: Beach Petroleum

Australia urgently needs to develop a blueprint for securing its existing and future energy supplies and infrastructure, warned Beach Petroleum managing director, Reg Nelson in an address to the annual South Australian Energy Market Briefing in Adelaide.

Mr Nelson said the strategy should include using depleted onshore reservoirs around the Moomba gasfields to store emergency supplies of gas from the Timor Sea - in much the same way that the United States holds nine months of emergency oil supplies underground.

The security call has been accompanied by a renewed warning that by 2005, Australia may have to import up to 50% of its liquid transport fuels unless there is a concerted effort to bolster exploration and establish a sound gas-to-liquids industry.

"With the bulk of our future gas supplies remote from populated areas, a coordinated terrorist attack on our key and vulnerable energy sites, particularly vital offshore oil and gas installations, could cripple Australia," Mr Nelson said.

"Unless we diversify our future supply base, we could see a Longford multiplied many times over - and on a national scale," he said.

"While it is heartening that defence and energy strategists are starting to recognise the problem, nonetheless there remains a compelling need for a strategic review of all future options available to prevent such massive disruption to our energy supply grid."

Mr Nelson added that the Cooper Basin area of South Australia was well placed to deliver such national security by providing the site for an energy hub and a National Strategic Gas Reserve.

Selected volumes of offshore supplies routed to southeastern Australian markets could be directed into old underground reservoirs in the Basin.

This would provide a "buffer" against the time it would take to repair pipelines or offshore platforms damaged in terrorist activity. Other measures to counter security threats or disruption of the nation's gas and oil supply chains, could include:

· "Third party" access to the Moomba gas processing facilities in far north South Australia, to encourage further gas exploration for new reserves

· A national gas development plan, including the National Strategic Gas Reserve

· Increased government focus on stimulating the exploration industry to discover more domestic petroleum reserves - including speedier resolution of Native Title issues and allowing tax deductions to flow to investors to free up access to capital

· An Energy Demand management program which recognises that liquid fuels are essential for transport, agriculture, mining and tourism

· Diversification of supply, recognising that the bulk of Australia's primary energy sources for many years to come would be petroleum and eastern seaboard coal and

· More comprehensive research and development, including an increased commitment to advanced fuel technologies, such as gas-to-liquids and fuel cells.

Mr Nelson said Australia's liquid fuel position was critical. Unless more domestic reserves were discovered, an increased reliance on imported fuel would result in:

· A diminishment of the nation's defence preparedness

· Economic pressures through loss of export income

· Loss of taxation revenue, and

· Insecurity flowing from increased reliance on foreign-owned tanker traffic.

Mr Nelson said that one of the most important issues facing Australia during the first 20 years of this century was energy for electricity and transport fuels.

"If additional diversified energy sources are not found within this period, Australia will then have an energy crisis as a result of a rapidly emerging shortfall in liquid hydrocarbons and looming gas shortages, particularly in southeastern Australia.

"To secure supply, it is vital that additional pipeline infrastructure be established, such as the Papua New Guinea pipeline into Queensland, the Timor Sea to Darwin project and the Victoria to South Australia gas pipeline."

"Australia must find solutions to these potential shortages or face losing control over the continued supply of its most essential resources."