Media Releases - 17 October 2019

Santos’s Narrabri CSG scheme can’t cut gas prices, risks drought-stricken inland’s crucial water source

  • Australia has 36 years’ worth of gas resources cheaper than Narrabri gas
  • Santos is diverting gas that used to supply NSW to its overseas export terminals
  • Narrabri CSG threatens Great Artesian Basin and farmland in our worst drought
  • Farmers to visit NSW Parliament today seeking support for CSG moratorium bill

A damning new report is set to overturn assumptions that Santos’s controversial proposed coal seam gasfield at Narrabri can ease damagingly high gas prices on the east coast and warns instead the project is part of the structural shift to high gas prices that is pushing the manufacturing industry to the brink. 

The report, by Pegasus Economics, shows that Narrabri CSG is expensive at about $7.40 per gigajoule, far more expensive than other gas produced in Australia’s Eastern Gas Region, where the average cost of production is $2.91 per gigajoule and the most expensive is $4.90/GJ from the Otway Basin in Victoria. Narrabri gas will also need a pipeline to reach the Sydney market, which will increase cost to $9-9.40/GJ. 

Report author and Pegasus Economics Director Alistair Davey said: “We’ve investigated where this coal seam gasfield 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. 

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

“Santos has used the pretext of looming gas supply shortages in NSW as a fulcrum to garner regulatory approval for its project without acknowledging the central role it played in creating the circumstances that it claims the Narrabri Gas Project promises to help alleviate.” 

The report highlights how Santos was the major cause of Australia’s short-lived gas crisis with its ill- fated decision to build two processing trains at its Gladstone export terminal when it only had enough gas to fully support one. 

Naomi Hodgson, spokesperson for the Wilderness Society which commissioned the report, said: “This damning report exposes the fairytale that a high-cost and low-yield coal seam gasfield 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. 

“The New South Wales Government has so far uncritically accepted Santos’s self-serving claims that it can magically lower gas prices with a small amount of high-cost gas in a market where production has dramatically increased in recent years. 

“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 anyway. Santos reckons Narrabri can deliver 73 petajoules of gas a year but the 

Industry Department reckons it can only supply less than half of that, 36PJ, less than a third of NSW’s gas current dropping gas consumption. 

“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?” 

Mullaley farmer Margaret Fleck, part of a farmers’ delegation that will meet politicians in the NSW Parliament today and tomorrow, said: “It’s hard for people in Sydney to appreciate the extreme stress that farmers are under in this unprecedented drought. 

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

“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.”

The report is available at https://www.csgfreenorthwest.o... 

For further comment contact:
Report author Dr Alistair Davey on 0422 211 110
Farmer Margaret Fleck on 0428 437 930
Wilderness Society Newcastle Campaign Manager Naomi Hodgson on 0448 337 072 

For more information, contact media adviser Alex Tibbitts on 0416 420 168