NSW could run out of gas for up to three weeks next winter, energy company AGL is warning.
With government restrictions on new gas developments in the state AGL said consumers will be hit with higher gas prices and warned “dire economic and social consequences” could result.
Queensland’s international gas exports are expected to ramp up this year which will tighten domestic market supplies. NSW relies on interstate imports to supply about 95% of its gas and as long-term supply contracts with Victoria and South Australia expire, consumers will be forced to pay higher prices or go without.
“The timely development of new sources of supply is imperative to ensure that demand for natural gas in NSW homes and businesses can be served,” AGL said in a submission to the NSW government inquiry on the supply and cost of gas.
“There are adequate gas reserves (in the form of CSG) in the ground in NSW, however, regulatory restrictions which impact CSG developments are exacerbating potential gas supply shortages in the state.”
The energy company’s modelling suggests that without new supply development, including the expansion of pipelines to connect with the west coast gas market, NSW will face gas shortages from 2016.
“Even with these developments, NSW may face 21 days of unmet demand in winter 2016. Such an outcome may be better or worse depending upon weather and other variables,” AGL said, adding the government may have to use emergency powers to ration use of the resource.
“Curtailment would likely see industrial and commercial customers curtailed ahead of emergency facilities and households. Such emergency powers have been exercised in the past – for example during the winter of 2007 network operators curtailed some industrial and commercial customers due to inadequate contracted gas supplies,” AGL said.
The energy company is currently developing CSG projects in Gloucester and Narrabri. But the project has stalled because of a combination of government restrictions and severe public backlash.
“AGL’s analysis shows that the Gloucester and Narrabri CSG projects in NSW can make up an anticipated supply shortfall from 2017,” it said.
In September the state government extended a freeze on new petroleum exploration and production licences for an additional 12 months.
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