Santos managing director and chief executive officer Kevin Gallagher claims the proposed Narrabri coal seam gas (CSG) project could fill an important niche for the domestic gas market on the east coast of Australia.
Speaking at the Australian Petroleum Production and Exploration Association (APPEA) event in Brisbane, Gallagher said Santos had an obligation to the domestic market that could be filled by the Narrabri project in New South Wales.
“In Queensland, we’ve reduced the cost of drilling coal seam gas wells by a massive 84 per cent since 2015,” Gallagher said. “We’ll bring that experience to Narrabri, and together with the high quality of the coal seams there, that will make Narrabri gas very competitively priced.”
Santos’ plans for Narrabri are in tune with a 2018 Commonwealth Government ruling — the Australian Domestic Gas Security Mechanism (ADGSM) — which states that domestic customers should take priority for the purchase of uncontracted gas.
Gallagher also offered a defence of the company’s decision to build a second train at its Gladstone LNG project at Curtis Island, Queensland, which he said had been blamed as a contributor to the “tight” status of the current east coast domestic gas market.
“Without the large scale development of the Queensland coal seam gas fields, the east coast domestic gas market today may even have been in a worse situation,” he said.
“That’s different, though, from saying Santos and the other LNG exporters have no obligation to the domestic market. At Santos we fully accept that we do.”
Gallagher’s comments echo the findings of the Gas Inquiry 2017-2020 interim report released last week by the Australian Competition and Consumer Commission (ACCC), which found that the oil and gas industry had ensured domestic gas supply until at least 2023.
“Following announcements in 2017 and 2018, there have been a significant number of new gas supply agreements in 2019 providing gas to domestic customers,” said APPEA chief executive Andrew McConville.
“The oil and gas industry announced billions of dollars in new investment in 2018 and beyond, to bring more gas into the market, supporting both domestic gas consumption and the gas export projects that are underpinning much of Australia’s economic growth.”
Narrabri has received criticism from certain environmental groups and locals who are concerned about the project’s potential ecological impact.
The operation is intended to cover around 1000 hectares of a 95,000 hectare area of the Pilliga state forest. An environmental impact statement (EIS) submitted to the NSW Government in February 2017 concluded that the project could proceed “with minimal and manageable risk to the environment”.