Video: Malcolm Turnbull says east coast faces gas shortage three times worse than expected
The opening of an energy bill in Australia unleashes a common and predictable sequence of responses — incandescent rage, disbelief, blame and contemplation of the inevitable question, “when will it stop?”
The same question has lately exercised the minds of those running the Australian Government too.
Rule number one in politics is carefully avoid absolute predictions on the scale and timing of bill pain eradication — because the malady is politically incurable.
Even so, the Government’s best energy economists at the Australian Competition and Consumer Commission (ACCC) and the Energy Market Operator have crunched the numbers to tackle the “why”, “when” and “how” of price pressure relief.
As economists tend to do, they’ve answered in a number, which looks like this: 107,000,000,000,000,000.
That’s the number of “joules” of gas energy eastern Australia needs to find — and fast — to avoid a massive shortfall from next year.
The internet tells us a joule is roughly the amount of energy required to lift a medium-sized tomato one metre vertically from the surface of the earth.
Add the 15 zeroes and multiply by 107, and the extent of the east coast’s woes make for a gigantic, national, tomato-elevation inadequacy.
For ease of comprehension, economists don’t work on scales of tomatoes, nor in zeroes, they instead prefer to measure joules by the quadrillion, simply called “petajoule”.
Greater Sydney apparently consumes about 100 petajoules of gas a year.
Eastern Australia’s gas and electricity price crisis has been inflicted by the bow-waves of LNG transport ships each hauling, on average, 3.1 petajoule loads of gas off to Asia.
So to solve the looming shortfall, the Government needs to stop the equivalent of 34 shiploads of gas leaving eastern ports such as Queensland’s Curtis Island.
Boat turn-backs: The new Morrison mission
In another ministerial life, Scott Morrison made his name as the uncompromising master behind the naval blockade of wooden fishing boats entering Australian waters.
As Treasurer, he’s keeping a watchful eye on 15 shiploads of LNG the big exporters are currently planning to sell on overseas gas spot markets.
“If we can get those 15 ships back, turn those boats back around this way, if you like, then that will go a long way to addressing the shortfall that is currently there,” Mr Morrison said.
Give or take a ship or two, Mr Morrison’s maths draw on an ACCC prediction that 63 petajoules of Australian gas — excess to contract requirements — are destined to go onto international spot markets.
Convincing Origin, Shell and Santos to keep the gas in Australia would fill about 60 per cent of the immediate shortfall looming for 2018.
If the Government fails to convince them, the Treasurer’s ruled out buying the gas for domestic purposes.
“The answer is not … to import gas we’ve sold overseas, to pump it back in on terminals. Just think of the transport costs alone,” Mr Morrison said.
Of course, the physical importation of gas Australia has already exported is precisely what the Government will not allow to happen.
It’s pointing the never-before-used weapon of export control orders directly at the big gas companies to extract a backdown.
Either they agree to sell the 107 petajoules for domestic uses, or the weapon gets triggered by November.
Government sources have made it clear committing an armed hold-up on global gas market is not their preferred option — it’s risky and could backfire in the form of legal challenges or a loss of investor confidence — leaving the Prime Minister and his Energy Minister Josh Frydenberg no more than one to two months to persuade some of the world’s most savvy negotiators to see things their way.
Pipedream: The north-south gas divide
Even if the gas exporters blink this year, they won’t have found a permanent solution to a persistent problem — Australians need the most gas where it’s in least supply.
As industrial and population hubs, NSW and Victoria are woefully under-cooked for gas supply and are resisting all Commonwealth entreaties to exploit known underground pockets of coal seam gas.
While that stand-off continues, the south-eastern corner of the country will look on wistfully as spectators to a global gas feast happening to the north, where the rewards of an unprecedented investment boom in gas are now being reaped by Asian customers.
Tantalisingly, at the moment the Government grapples with the gas energy crisis, the world’s biggest floating industrial centre was last week being bolted to the sea floor off the coast of Broome.
Six times larger than the world’s biggest aircraft carrier, Shell’s Floating Liquified Natural Gas platform, Prelude, is a 660,000-tonne behemoth of the sea that’s being readied to extract, compress, store and transfer gas to Asian customers for the next 25 years.
It’s a demonstration of the serious money and logistics others are prepared sink into tapping Australia’s energy resources.
That gas will sail away from a country that has under-planned, under-invested and under-supplied its own needs from an energy resource the rest of the world can’t get enough of.
Shell’s Floating Liquified Natural Gas platform “Prelude” is a 660,000-tonne behemoth of the sea.