New tenements on offer to promote investment in Australian oil and gas industry

Australia has opened up 42 areas in Commonwealth waters off Western Australia, Victoria, Northern Territory and the Territory of Ashmore and Cartier Islands to help stimulate investment in the gas industry.

About 100,000sqkm in the Bonaparte, Browse, Northern Carnarvon, Otway and Gippsland basins are under offer in the 2020 Offshore Petroleum Exploration Acreage Release.

Federal Minister for Resources, Water and Northern Australia Keith Pitt says the annual acreage release is a key part of the government’s strategy to promote and encourage investment in petroleum exploration for the benefit of the Australian economy.

“I acknowledge the impact the COVID-19 pandemic is having on the oil and gas industry. The government strongly believes exploration will play a key role in helping our economy recover from the pandemic,” he said.

“This year’s release is dominated by areas in established oil and gas provinces with existing infrastructure. This is consistent with the drive to ensure major projects have and maintain steady supply into the future.”

COVID response commission backs gas spending to drive economy

The acreage release comes as the National COVID-19 Commission (NCC) proposes a gas-led manufacturing industry push to lead Australia out of the economic downturn caused by the pandemic.

This includes underwriting investment in new gas pipelines including a potential $6bn trans-Australian pipeline between the east and west. Though recent changes to Western Australia’s gas reservation policy mean that the state’s domestic gas cannot be exported to the eastern states.

Australian chief scientist Alan Finkel also backs this stance, saying that gas-fired power would play a key role in place of coal for many decades while renewable energy scaled up.

He also dismissed a letter from 25 scientists who said his support for gas was not consistent with addressing climate change, saying that the adoption of renewable energy would be faster if natural gas-fired electricity continued to be available in the near to medium term.

This is despite the Australian Energy Market Operator (AEMO) saying in July that additional gas-fired power is not essential for an electricity grid that is based increasingly on renewable energy.

Gas-led recovery a mistake: critics

The proposal for a gas-led recovery has been criticised by pro-renewables think tank the Institute for Energy Economics and Financial Analysis (IEEFA).

It said that Australia could not afford to subsidise the gas industry when it gave back so little in return.

IEEFA analyst Bruce Robertson noted that there was already a massive global over-supply of gas while the lack of government regulation had meant that gas companies had been able to set the price for gas on the east coast of Australia.

“We don’t need new gas projects as proposed by the NCC,” he said.

“We need the supply we already have to be made available to Australian consumers at reasonable prices and regulated by government via a domestic reservation policy which reserves gas for local consumers, like what they have on the west coast of Australia.

“The government does not need to underwrite volumes. It exposes the taxpayer to unacceptable risks — risks that should be borne by the private sector.”