Addressing the Australian Domestic Gas Outlook 2016 conference in Sydney, Ferguson, who was on the board of Queensland Curtis LNG project operator BG Group until Royal Dutch Shell absorbed it last month, said the New South Wales “disease” of politicians blocking gas development had “infected” pollies of other jurisdictions, including the NT.
NT Labor leader Michael Gunner last month promised a moratorium on hydraulic fracturing, yet also included the North East Gas Interconnector in his infrastructure plan, mimicking his NSW counterparts’ who blocked gas development yet are backing the pipeline to help save the state from a gas shortage.
“Make no mistake – governments that encourage investment and then change the rules to make such investment unviable can be held liable for compensation,” Ferguson, who also chairs the Australian Petroleum Production and Exploration Association’s advisory board, said.
As a precedent, Ferguson cited the NSW Supreme Court’s ruling last May that overturned the state government’s suspension of Metgasco’s drilling approval for the Rosella-1 gas exploration well.
In December Metgasco ended its 10-year involvement in NSW CSG with a $25 million payment from the government that helped it announce a profit last year, though it’s now effectively been forced to start with a clean slate as a shell company.
Ferguson said that not only was this “not a good use of taxpayers’ money”, it could have ripple effects for NSW’s hoped-for saviour pipeline, which was “now in question” after developer Jemena said NT Labor’s moratorium policy was creating uncertainty in the gas industry, even though it’s not even in power.
Jemena said it would slow the project’s development and could lead to a reduction of the pipeline’s size and carrying capacity.
“Should that happen, it won’t be the panacea the NSW government was hoping for,” Ferguson said.
“It would be too little, too late to avoid the looming gas crunch; and given the cost of such a pipeline, this may not be cheaper gas anyway.”
NSW energy minister Anthony Roberts revealed last month that the state came very close to severe gas shortages last year, with both state and federal governments forced to directly intervene to “avert disaster” for thousands of businesses.
“It was almost catastrophic,” Roberts said.
Ferguson believes this problem is now years away from being resolved, and “the dominos are falling”, with the policies of NSW and Victoria emboldening anti-gas activists and “frightening” politicians in other jurisdictions.
He also panned his Western Australian Labor colleagues who recently voiced their support for an anti-frac policy.
Moratoriums also now have bipartisan support in Victoria and Tasmania.
Ferguson fears there will be no end now that activists have gained leverage with politicians, with the introduction of the “water trigger” and the Lazarus CSG inquiry revealing that the “problem” for industry has now spread to the federal sphere.
“Activists and some cross-bench politicians are likely to target offshore oil and gas operations next,” Ferguson said.
While he was asked to comment on gas reservation and market transparency – which would have been predictable anyway given APPEA’s well-known stance on both – Ferguson warned that these were “second-order issues” because “even the most transparent market won’t work well if gas supply is dwindling”
