The Australian Petroleum Production and Exploration Association (APPEA) has criticised the Queensland Government’s announcement that it will trial restrictions on gas marketing for newly released gas exploration acreage.
The State Government released 58km²of land in the CSG-rich Surat Basin for gas exploration, under the condition that production must be used in Australia to combat gas shortages on the Australian eastern seaboard.
While APPEA welcomed the government’s release of land for gas exploration, it said it does not support the Australia-only sale conditions.
APPEA CEO, Dr Malcolm Roberts, said, “Producing more gas from Queensland fields is essential for both the LNG export industry and local customers. The best – indeed the only – way to put downward pressure on local prices is to expand supply.
“Over the last two years, the state government has released about 11,500km² for exploration. Unlike other States which are playing politics with Australia’s gas supply, the Queensland government understands the urgent need to develop new gas reserves.
“However, APPEA is disappointed that the government has, for the first time, attached ‘Australian market conditions’ to the release of new acreage.”
Dr Roberts said that while the government was clear that it was only a trial and would only apply to the 58km², imposing restrictions was unnecessary and could discourage development.
“Australian market conditions are unnecessary. Queensland’s LNG projects are the leading suppliers to the local market. Supply to domestic customers from the projects is upwards of two-thirds of Queensland’s demand. Customers do not need regulation to obtain gas.
“Experts such as the Productivity Commission and the Australian Competition and Consumer Commission have warned that governments intervening in the market risk killing the incentive to develop new reserves.
“Now is not the time to create regulatory uncertainty. Eastern Australia is facing a supply shortfall in 2019. Exploration has crashed to its lowest level since 1981. We need to see State governments striving to expand gas supply by releasing more acreage and cutting regulatory costs.
Dr Roberts acknowledged that the Queensland Government was developing an action plan to boost local supply and said the industry supported the initiative and urged other states to follow suite.
“More acreage for exploration and lower regulatory costs will help bring new supply to the market. More restrictive regulations will not.”