APPEA Advisory Board Chairman, Martin Ferguson, has presented a speech to the Petroleum Club of the Northern Territory, exploring the misconceptions that underpin arguments against gas.

In his speech Mr Ferguson highlighted three myths that he believes need to be dispelled.

Myth 1: Fraccing is dangerous and shale gas development threatens water supplies

Mr Ferguson said hydraulic fracturing has a long history of safe operations and has been used to safely produce gas around the world, in Australia and the Northern Territory.

“Fraccing has been in use since 1947 in the oil and gas industry and was first used in the Territory in 1967. It is also used to develop water bores,” Mr Ferguson said.

“Across the world, more than 2.5 million fracs have been completed. Fraccing, horizontal drilling and related technologies are also continually being refined.

“The safe use, storage and disposal of chemicals is tightly regulated, and in many cases, it is much more regulated than in other industries.”

Mr Ferguson also discussed shale gas development.

“Shale gas development uses water – but on a modest scale compared to other land uses. The Hawke Inquiry found that the entire NT gas industry – when fully developed – would require no more water than has been allocated to some individual pastoral properties,” Mr Ferguson said.

“Even so, where there are real constraints on water supply, regulators and the gas industry must consider whether developments should proceed and, if so, under what conditions.

“Where possible, the industry will look to use saline or recycled water to reduce its demand on high-quality reserves.

“Our industry’s understanding of these issues shapes our operational practices, and we are confident that the new NT Government’s fraccing inquiry will broadly agree with the findings of the Hawke Report.”

Myth 2: Renewables and batteries mean we don’t need gas

Mr Ferguson said the claim that the use of renewables and batteries means that gas is no longer needed is false.

“The more renewables we use, the more we need gas. When the wind isn’t blowing and the sun isn’t shining, another source of power is needed,” Mr Ferguson said.

“Right now, battery technology is nowhere near advanced enough to provide affordable large-scale storage. It will be very useful in some small-scale, local, off-grid applications, but it cannot deliver back-up power across the electricity grid.

“Excitement over the potential of batteries is understandable. But we should remember similar excitement over biofuels a few years ago.”

Mr Ferguson said the ability of gas-fired power to rapidly start and shutdown is the perfect partner for wind and solar.

“Without gas, renewables cannot provide energy security, nor can they deliver on their potential for emissions reduction,” Mr Ferguson said.

“Gas will remain essential for many years to come.”

Myth 3: The gas market has collapsed and there is no demand for gas

Mr Ferguson said there is still a demand for new Northern Territory gas supplies and that new gas supply will initially target the state and the eastern states, which needs more gas, rather than international markets.

“The east coast gas market is already tight, and there is likely to be a shortfall in supply towards the end of the decade,” Mr Ferguson said.

“Connecting the Territory to the east coast market will boost competition. It will diversify supply and it will enhance energy security across most of Australia.

“Yes, global demand for gas has softened in recent years and the global LNG price has fallen. But gas demand is forecast to recover and to grow strongly over the next two decades.

“Less than a decade from now, the world will need new sources of LNG supply, with demand forecast to grow strongly in the 2020’s accelerated by the Paris Agreement.”

Moving forward

Mr Ferguson said the key to Australia’s gas industry moving forward is the implementation of good legislation and regulation.

“Good laws and good regulation are essential for this industry,” Mr Ferguson said.

“We don’t want under-regulation, but nor do we want regulation that unnecessarily impedes access to resources, or makes it very difficult to cost-effectively develop those resources.”

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