Is Australia really running of gas and does the Federal Government need to impose export restrictions?
“No, not really”, is the answer, according to Melbourne University researchers who found that a “gas-supply shortfall is very unlikely to occur”.
Central to the Government’s policy is the idea that Australia faces an “energy crisis” and consumers need to be protected from contracted export supplies causing shortages which would cause domestic prices to spike.
The paper published by chemical engineers Dylan McConnell and Tim Forcey argued the agency charged with administrating and operating national gas and electricity markets, the Australian Energy Market Operator (AEMO), overstated the severity of a potential shortfall.
Prior to the Federal Government’s announcement last month that restrictions could be placed on gas exporters, AEMO warned in its Gas Statement of Opportunities report that national reform was needed, or else Australia would fall victim to gas supply shortages, which in turn would lead to power outages from late next year.
‘A Short-Lived Gas Shortfall’
AMEO’s modelled gas supply gap is less than 0.2 per cent of total annual gas supply. (Supplied: Dylan McConnell and Tim Forcey)
That idea has been savaged by Dr McConnell and Mr Forcey, who was formerly AEMO’s gas principal.
In a research article titled A Short-Lived Gas Shortfall, the pair found, “the size of AEMO’s forecast shortfall is very small, amounting to no more than 0.2 per cent of annual supply (of either gas or electricity).”
Dr McConnell and Mr Forcey were equally blunt about the data AEMO used in its report and helped shape government policy.
“AEMO lacks information about gas reserves, gas production facility capabilities, and the short and long-term plans of gas producers,” the pair wrote.
“Were AEMO able to access better gas-industry information, AEMO’s modelling activities would be more robust and have greater value.”
Gas supply and prices still under review
It is a view understandably not endorsed by AEMO’s new chief executive Audrey Zibelman.
Speaking on ABC’s The Business program Ms Zibelman. denied that her organisation’s forecast was incorrect or incomplete.
“The forecast we made was based on the data provided to us by the producers,” she said.
“The information was complete from the perspective of the time we received it.”
However Ms Zilberman was not overly effusive about the quality of information gas producers have always supplied.
“Previously, there’s always been a challenge in terms of the transparency of the information, and the availability,” she said.
Ms Zilberman also conceded AEMO needed a better level of communication with the producers on how “we are using that data” so “they can make certain what they’re giving us is as accurate as possible”.
The gas market’s lack of transparency on pricing and supply is well-documented, and is subject of yet another inquiry by the Australian Competition and Consumer Commission.
AEMO is currently updating its report on gas supplies.
Asked whether AEMO was likely to change its views about a potential gas shortage, Ms Zilberman’s replied, “I don’t want to get ahead of the publication of the report” and emphasised the need for the gas industry to work closely with AEMO.