The proposed $589 million Newcastle gas import terminal was desperately needed to avoid a gas shortage crisis in NSW, a new report says.
The report, Running on Empty, prepared by EnergyQuest for NSW Business Chamber, forecasts small businesses and households will face gas shortages or significant cost increases if urgent action is not taken on gas supplies.
The report calls on the NSW Government to:
- rapidly approve the Narrabri Gas Project, subject to Planning Commission endorsement;
- support proposed liquid natural gas import terminals at Newcastle and Port Kembla; and,
- begin a program of upgrades to ageing gas pipeline infrastructure across the state.
"These initiatives are urgent as it will take around four years to get production to levels required to meet demand," Hunter Business Chamber chief executive Bob Hawes said.
Newcastle GasDock Company, a subsidiary of Energy Projects and Infrastructure Korea (EPIK), plans to build the Newcastle gas import terminal in the Hunter River's South Channel, between the Kooragang coal terminal and the Tourle Street bridge.
It would include a 170,000-cubic metre floating storage and regasification unit and onshore infrastructure.
The terminal would supply up to 80 per cent of NSW's liquified natural gas needs via a connecting pipeline to the state's existing gas-supply network, helping to drive down spiralling prices on the east coast.
NSW Planning minister Rob Stokes announced in August that the project could be operational in four years after granting the project high-priority planning status.
The NSW Business Chamber estimates that at least 300,000 jobs in NSW depend on adequate and affordable gas supply, including up to 250,000 in manufacturing industries.
Newcastle Restaurateur Neil Slater, who owns Scratchley's and Battlesticks, said his monthly gas bill had risen by more than $1600 since March, an increase of more than 50 per cent.
"Restaurants run on tight margins at the best of times, so an increase like that is incredibly difficult for a small business to absorb," he said.
"And that's just one of our energy costs - we also have substantial electricity bills - so when you add it all up, it has a big impact on the cost of doing business."
Another key piece of gas infrastructure, the Queensland-Hunter gas pipeline had its development consent extended earlier this year.
The initial 2009 approval required "substantial commencement of construction" by February 11, 2019 when the initial consent expired.
The company argued work had not started because of uncertainties in the gas supply market that included a proposed Narrabri coal seam gas project.
The new consent extends until February 2024.
The Running on Empty report has been criticised by the Lock the Gate Alliance.
Spokeswoman Georgina Woods said the chamber's focus on the Narrabri project failed to provide a vision for sustainable industry supplied by low-cost and inexhaustible renewable energy.
"Coal seam gas produced at Narrabri would entrench the pattern of high-cost, low-yield and unreliable gas supplies. What manufacturing needs in NSW is a bit of vision and an industry plan for switching to cheap and reliable renewable energy.
"This year's ACCC gas inquiry interim report showed that supply for gas has increased and demand has dropped. There's no shortage of gas, there's just too much expensive gas that drains aquifers and wrecks rural communities and economies."
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