NSW Gas Gets The Green Light
The approval of Santos’ Narrabri project signals a strong step forward on gas, energy prices, jobs and regional development. By Tim James.
In a classic case of better late than never, NSW residents can now expect to get strong gas supply from within their own state after a major approval required for Santos’ Narrabri gas project was granted this week.
The 70% of homes that harness natural gas tend not to consider its source, however it’s significant for many reasons and this week’s approval is good news for all Australians.
Let’s consider how and why it counts, and particularly now in COVID recovery.
For too many years, NSW has imported 95% of its gas needs despite having rich local resources.
The saga that has for many years seen Santos spend $1.5bn on a project that, due to delays and difficulties, it has had to write down to zero value is now entering an essential and more enterprising era. It’s about time too.
Now’s not time to dwell on the past, but the history of this project provides considerable and valuable lessons for government, community and business. With the benefit of hindsight, some politics and public policy actions at the time, and to be fair some commercial steps too, have held back hope and the prospects of harnessing this valuable resource.
Looking ahead, at this critical time for the development of jobs, regions, industries and the economic growth of the state and nation, this project can and should play its part in driving recovery and opportunity.
The project is forecast to meet half of NSW gas needs. That’s vital given the lowly current 5% of NSW generated gas will cease supply in 2023, as Watercooler wrote in February.
Some key facts help one to focus on the project’s potential to deliver:
1,300 jobs during construction
200 jobs ongoing and 500 direct and indirect jobs
$3.6bn in direct capital investment
$12 billion boost to NSW’s real economic output
$3bn in direct revenue for NSW government via royalties and taxes
NSW and the nation need this investment, jobs and opportunities, particularly in regional areas. Imagine turning down these imperatives at this time and what message that would send to people, community and business who are looking for hope, confidence and opportunity.
In addition to these core drivers, it’s the forward opportunities for Narrabri and regional NSW flowing from this project that are exciting and even more essential right now.
The market is moving already. It has been reported that a number of companies have lined up to buy Narrabri gas, including brick manufacturer Brickworks, gas wholesaler Weston Energy and fertiliser maker Perdaman.
There’s hope for new factories too as manufacturers can expect easing of the crippling gas costs that have constrained so much of their capacity to invest and grow.
The union movement broadly understand the opportunity, even if Labor do not. AWU National Secretary Daniel Walton was right to declare this week:
“NSW should be a thriving global heavy manufacturing hub, and that’s exactly what we can become if we better harness our gas wealth. This approval is an excellent step.”
This project also represents a big boost in unlocking federal government support under the energy and infrastructure deal done between NSW and the Federal Government eight months ago. If NSW delivers, then so too will Canberra in energy efficiency and clean technology.
It’s no wonder locals are describing it as a game changer.
Of course those opposed to gas, who have delayed this project so much already, are now even more driven to its destruction. One even wrote this week that the investment market should take the initiative to put it “out of its misery”. Not if the market response this week is anything to go by.
The project now requires approval of the Federal Environment Minister Sussan Ley, who coming from regional NSW herself, will be well placed to consider its merits.
The Prime Minister, in his National Press Club speech this week, outlined a clear and strong message on gas. He said:
“If you’re not for gas, you’re not for manufacturing and heavy industries and the jobs that they support. For many manufacturers, gas is half the problem that they confront and that is why reforming that sector is so foundational to the achievements we hope for in the manufacturing sector.”
At the Menzies Research Centre, over many months now, we’ve researched, written and advocated for greater gas supply. We’re encouraged to see it coming to life. Our research report is imminent and will make the case for further new supply like that which we’re pleased is now more likely in Narrabri.
We are for gas, manufacturing, industry and jobs, recognising too the critical role gas will play in reducing emissions and partnering with renewables.
Greater gas supply for Australia is shaping up as a great win-win for all Australians.