Floating offshore gas hub proposed to tackle Victoria’s energy supply crisis – The Age

Victoria is angling fora massive floating liquefied natural gas import facility to allow the state to buy gas from overseas to help tackle a serious supplycrisis.

Despite the state's potentially enormous gas reserves in Bass Strait, and Australia's position as one of the world's largest exporters,the Andrews government is understood to be in active talkswith energy giant AGL to build afloatingLNG import terminalclose to Melbourne, possibly in Western Port.

The terminal, which would supply the east-coast gas grid,would allow Victoria, NSW and South Australiato import lower cost gas,potentially from the US or Western Australia.

Premier Daniel Andrews is expected to press the planat a Council of Australian Government's meeting on Friday, along with a new proposalto help prevent local manufacturers and households from being denied access to cheaper gas because of big export contracts to Asia.

The state government is understood to have offered to "fast track" the environmental and planning approvalprocess for the facility, which would be likely to cost $200 to $300 million, although the decision would ultimately lie with the Commonwealth.

Victoria is believed to be seen as a favourable option,partly because it is located between NSW and South Australia, which would lower pipeline costs, and partly because, unlike NSW, it already has significant storage capacity at the Iona plant, near Port Campbell inthe state'ssouth-west.

The idea of the new import facility was first floated by AGL chief executive Andy Vesey in November last year.

At the time, the idea thatAustralia, soon to be the world's largest LNG exporter, would need to import gas was dismissed.

But with some businesses in the southern states reportedly being quoted as much as $20 a gigajoule this year, up from as little as $4 a gigajoule in 2015, the idea is gaining traction.

Industrial gas users in Japan which is the largest buyerof AustralianLNG pay much less, about $12 agigajoule.

The global price is now even lower than the price that has been contracted by LNG producers to supply the Asian market, thanks to a significant oversupply.

The idea of the new terminal would be to buy LNG for south eastern Australiaat the lower global price.

Energy Minister Lily D'Ambrosiosaid there was something "seriously wrong" when Australia gas was being sold in Japan for a lower price than businesses were being charged for it in Victoria.

University of Melbourne Climate and Energy College research fellow Dylan McConnell said releasing new gas supplies into the Victorian market was unlikely to influence short-term prices for industrial users because new supplies could take a long time to development.

Governments also needed to consider that some consumers were shifting away from gas due to new household technologies that relied on electricity, Mr McConnell said.

He argued that some households were withdrawing from gas in favour of new electric technologies, including induction cook tops, electric hot water and heating and rooftop solar.

The Australian Energy Market Operator has also raised doubts about whether new supplies would translate to lower prices, citing the increased cost of sourcing new gas and the "geological challenges of extraction".

See the rest here:

Floating offshore gas hub proposed to tackle Victoria's energy supply crisis - The Age