Narrabri CSG project damned as “fairy-tale” that won’t cut gas prices

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Wilderness Society releases damning economic assessment of Narrabri CSG project that suggests it will do little to address the Australian gas price crisis

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A leading environmental organisation has hit out at a proposed mega-expansion of gas extraction in New South Wales’ north-west, saying the project is too expensive to lower gas prices and suggested that developer Santos should not be trusted to act in the interests of domestic gas users.

The Wilderness Society assessment – prepared by Pegasus Economics – says the project is unlikely to make any dent on domestic gas prices, would be a major new source of greenhouse gas emissions and would also exacerbate drought conditions by depleting groundwater stocks.

It wants the Narrabri CSG project to be ditched, and calls for the NSW Government to support lower cost renewables as a cheaper way of boosting NSW’s energy supplies.

“This damning report exposes the fairy-tale that a high-cost and low-yield coal seam gas field at Narrabri can or will alleviate the economic harm Santos has already done to the east coast manufacturing industry with its reckless coal seam gas export gamble,” spokesperson for the Wilderness Society Naomi Hodgson said.

The Wilderness Society has questioned whether Santos can be trusted to deliver lower gas prices for domestic consumers. The environmental organisation has pointed to Santos’ role in creating an Australian gas market where the bulk of new production is being sent offshore while consumers pay over increasing prices.

The redirection of Australian gas production to the export market has led to what some claim to be a ‘gas supply crisis’ in Australia’s eastern states, leading to surging domestic gas prices. But this comes as Australia’s gas production has doubled in the last decade, with experts suggesting that simply increasing the supply of gas will not solve the cost problem.

Narrabri has been singled out as a high potential site for renewable energy developments, with good access to quality wind and solar resources that could serve as an alternative to further gas exploration.

Australian consumers are paying higher gas prices as they are effectively competing against international customers for Australian gas, a point the Wilderness Society has highlighted.

“Australia has plenty of gas. We are the world’s biggest gas exporter and Narrabri would not change that. Even the Federal Industry Department doubts Santos’s claims about how much gas Narrabri could supply,” Hodgson added.

“Do we really want to destroy the Great Artesian Basin, farmer’s livelihoods and our last great inland forest, the Pilliga, for more expensive gas?”

The Narrabri CSG project would involve the drilling of up to 850 gas wells over an area of 95,000 hectares, including lands located within the Pilliga state forest.

Santos believes the project could supply up to 50 per cent of NSW’s demand for natural gas, with NSW being largely dependent on importing gas from Queensland and Victoria for its gas supply.

The assessment has shown that the cost of producing gas at the Narrabri CSG project would be substantially more expensive than other supplies of gas available in the market, with an expected cost of $7.40 per GJ.

“We’ve investigated where this coal seam gas field at Narrabri will sit in the cost curve of the east coast market, and conclude that there are plenty of cheaper gas resources that could be developed,” Pegasus Economics director Alistair Davey said.

“We conclude that a coal seam gas field at Narrabri is unlikely to have any bearing over gas prices in the short or long term.”

Margaret Fleck, a farmer from Mullaley located south of Narrabri who is participating in a delegation of farmers meeting with NSW politicians in Sydney this week, said that the Narrabri CSG project would make life harder for farmers in the region.

“This gasfield will deplete groundwater and put it at risk of contamination from spills and accidents. It must not be allowed to proceed,” Fleck said.

“Santos said its Gladstone export terminal would not affect domestic supply. Now it is trying to pull the wool over governments’ eyes all over again with more false claims it can reduce gas prices with a high-cost destructive coal seam gas project that threatens inland Australia’s most important water source, the Great Artesian Basin.”

Planning approval for the Narrabri gas project is currently being assessed by the NSW Department of Planning, Industry and Environment. Santos expects a final decision to be made by the end of the year.

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