Power Up: Beetaloo fraccing green light sparks the usual ruckus

While gas is typically the purview of Power Up’s sister column Got Gas, the Northern Territory Government’s decision to green light fracture stimulation in the Beetaloo Sub-Basin deserves some time.

In its decision, the NT Government said that all applications made for gas production in the Beetaloo Sub-basin — subject to the industry’s successful exploration and appraisal results — will go through a rigorous approval and monitoring process.

Applicants will be required to submit a Greenhouse Gas Abatement Plan outlining their pathway to net zero.

“The release of the Final Implementation Report into the Scientific Inquiry into Hydraulic Fracturing, sets out significantly stronger environmental, cultural, social, economic and health protections in place than existed before the Inquiry was held. Gas is the transition fuel that enables renewable energy technology,” Chief Minister Natasha Fyles noted.

Responses were predictable as always with the Australian Pipelines and Gas Association saying the decision would provide much-needed supply to the domestic market, unlock economic opportunities in the NT, and support higher levels of renewable electricity generation.

At the other end of the spectrum, the Climate Council condemned the decision, saying it could imperil Australia’s march towards net zero as developing the Beetaloo could generate emissions equivalent to three times Australia’s annual domestic emissions over the next two decades.

Power Up maintains that while developing new sources of gas is still something Australia needs to do – which incidentally includes potentially bringing the Beetaloo into production – it needs to be done with an abundance of caution.

No matter how keen the NT Government might be to develop new sources of gas and the resulting revenues it will bring to its coffers, the commitment to hold developers to account in regards to emissions should remain a priority.

That’s if anyone manages to get a development off the ground in the first place.

While the attractions are certainly there, developing the projects will require a significant amount of investment into infrastructure to get the gas to market in the first place, infrastructure that neither the NT Government nor the Federal Government has any reason to be involved in beyond environmental and regulatory oversight and approvals.

Alleviating emissions, if policed strictly, would further add to the cost of development, which could serve to discourage the investment required to bring the project into production.

Should these considerations be addressed and the project still proceed, well, more power to them and gas for the East Coast, a win-win for all except the most dyed in the wool environmentalists.

Financial institutions stepping away from coal

Australia’s other major fossil fuel is becoming an even greater pariah than before with the Institute for Energy Economics and Financial Analysis (IEEFA) – never fans of fossil fuels to begin with – crowing that more than 200 globally significant financial institutions have committed to divesting their coal investments.

While it took almost six years for the first 100 institutions to adopt coal exclusion policies, that number has since doubled in just over three years – a sign that momentum is building.

It noted that of the 36 asset managers and owners with formal coal divestment policies, managing assets worth over US$50 billion, half have implemented or improved their policies in the last two years.

Additionally, several large global asset managers such as France’s Caisse des Dépôts et Consignations, the UK’s Fidelity International, and Storebrand and Government Pension Fund Global in Norway have established formal coal exit policies.

While this is likely be detrimental to the coal sector in the long-term, the short-term picture remains rosy thanks to high prices.

Highlighting this, Australian Pacific Coal (ASX:AQC) noted this week that it is on track to restart the Dartbrook underground coal mine as early as the fourth quarter of this year after securing a supply agreement with a global coal buyer.

“The Dartbrook Joint Venture is currently finalizing funding arrangements to meet future restart capex and working capital needs,” it noted.

While this won’t be true for all time, the current coal prices are providing producers with a big enough financial buffer to restart projects even without support from financial institutions – though probably not enough to develop new projects given the level of uncertainty.