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Economic Contribution of Natural Gas to Queensland

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Economic Contribution of Natural Gas to Queensland QRC Submission Submission to the Senate Select Committee on Unconventional Gas Mining 14 March 2016 Table of Contents ble of contents EXECUTIVE SUMMARY ........................................................................................................................... 3 INTRODUCTION AND GAS RESOURCES ................................................................................................ 6 THE QUEENSLAND RESOURCES COUNCIL ....................................................................................................... 6 QUEENSLAND’S HISTORY OF GAS PRODUCTION ............................................................................................. 6 BACKGROUND – QUEENSLAND’S GAS RESOURCES ........................................................................................ 9 GAS PROJECTS IN QUEENSLAND ................................................................................................................. 14 THE ROLE OF GAS IN A CARBON CONSTRAINED FUTURE ............................................................................... 16 QUEENSLAND - THE LEADER IN AUSTRALIA’S ENERGY SUPPLY ......................................................... 18 THE ECONOMIC CONTRIBUTION OF NATURAL GAS TO QUEENSLAND ........................................... 20 WHAT IS THE ECONOMIC CONTRIBUTION OF THE GAS INDUSTRY TO QUEENSLAND? ........................................ 20 SOCIOECONOMIC BENEFITS OF NATURAL GAS ............................................................................................. 21 THE SURAT BASIN – A CASE STUDY OF REGIONAL DEVELOPMENT .................................................................... 22 THE OPPORTUNITIES THAT GAS BRINGS TO REGIONAL QUEENSLAND .............................................................. 23 QUEENSLAND’S TRACK RECORD OF CO-EXISTENCE ..................................................................................... 28 ROBUST AND RELIABLE REGULATORY FRAMEWORK .......................................................................... 32 QUEENSLAND’S REGULATORY FRAMEWORK – FIT FOR PURPOSE ..................................................................... 32 ATTACHMENT ONE: QUEENSLAND’S LNG PROJECTS .......................................................................................................... 35 LNG – A THREE-STEP PROCESS ..................................................................................................................... 35 QCLNG ................................................................................................................................................... 35 APLNG ..................................................................................................................................................... 36 GLNG ...................................................................................................................................................... 36 ATTACHMENT TWO: QUEENSLAND’S WORLD-CLASS ENVIRONMENTAL REGLATORY FRAMEWORK ............................... 38 QUEENSLAND’S ENVIRONMENTAL REGULATORY FRAMEWORK ........................................................................ 38 BEYOND COMPLIANCE – CASE STUDIES ....................................................................................................... 43 HEALTH AND SAFETY.................................................................................................................................... 45 Page | 2 QRC Submission to the Select Committee on Unconventional ‘Gas Mining’ Executive summary The Queensland gas industry’s growth over the past decade is unprecedented, and while the capital investment phase is winding down, onshore gas production will continue to generate significant economic activity and royalties for the state. Queensland’s gas industry is a vital employment pillar, providing regional jobs across construction, fabrication and operations. And perhaps lesser known is the contribution natural gas has made to upskilling Queenslanders to build and manage a globally significant industry. It will be recorded in the history of this country that the creation of the onshore gas industry in Queensland was the largest concentration of private capital in Australia’s history. With the best part of a $70 billion investment it is - in today’s dollars - the equivalent of three Snowy Mountain Schemes. It is worth remembering that the Snowy Mountain Scheme was rated as one of civil engineering’s wonders of the modern world when it commenced in 1967. Importantly, the scheme also was the catalyst for the establishment of SMEC, a global consulting firm which grew out of the expertise built up at the Snowy Mountain Authority (SMA). This huge LNG investment in Queensland has built a world-class capacity and left Queensland with a legacy of a deep pool of engineering and consulting expertise. Queensland now has an opportunity to similarly leverage future exports from the concentration of world class construction expertise that natural gas has brought to Queensland. Queensland’s brand new export industry – the first in the world to source its gas for export from coal seams – took less than seven years from first approval applications through to the delivery of the first shipment of gas from QGC’s Curtis Island plant on 30 December 2014. Now all three plants, the Santos-led GLNG plant and APLNG plant have all celebrated their first shipments. When completed in coming months, the three Curtis Island projects at Gladstone will be able to process up to 24 million tonnes of LNG per annum. To put this into greater context, Curtis Island is larger than the Gorgon project off Western Australia, which at 15.6 million tonnes per annum, currently holds the title of largest single resource development in Australia’s history. Presently, global energy markets are no place for faint hearts. The world is awash with cheap energy in all its forms, partly as a direct result of the new technologies enabling the commercialisation of unconventional oil and gas – just as we have seen in Queensland with coal and in the United States with shale. Low spot prices for gas and coal have primed a deliberately misleading campaign by green activists to say the world is turning its back on fossil fuels, when the latest International Energy Agency(or IEA) World Energy Outlook confirms the opposite. The IEA’s report confirms gas is well placed to expand its role in the global energy mix. In fact, gas is forecast to remain the fastest growing fossil fuel at 1.4 percent per annum out to 2040. The 2016 BP Energy Outlook report was even more bullish, forecasting natural gas as the world’s fastest growing traditional fuel with consumption increasing by 1.8percent a year to 2035. Our neighbours in Asia will be increasingly important customers for Queensland’s gas industry. Page | 3 QRC Submission to the Select Committee on Unconventional ‘Gas Mining’ According to the IEA, demand for natural gas in the region is set to skyrocket by 160 percent. The BP Energy Outlook forecasts that China and India alone will drive more than 30 percent of the growth in global gas demand. The IEA is forecasting an annual demand growth of 40 million tonnes of LNG out to 2040. In the Queensland context, that represents about twice the capacity of Curtis Island when all six LNG trains have been commissioned. Currently, Queensland’s gas industry makes up 7 percent of the state’s gross regional product. That is, $22.1 billion dollars injected into the economy. The industry provides 5 percent of the state’s employment, with a wages bill of nearly $1 billion. Last financial year, the gas industry spent $9.6 billion on local goods and services with more than 3,500 businesses and provided community contributions to nearly 200 community organisations. According to treasury estimates, by 2017-18 those big gas projects will be delivering some serious royalty revenue – of the order of half a billion dollars – to fund state government service delivery. You will never hear from green activists an acknowledgement that Queensland’s extraordinary natural endowment of mineral and petroleum wealth actually belongs to all Queensland. The beneficiaries of Queensland’s gas industry are everyday Queenslanders. These are the Queenslanders who enjoy the luxury of lights at night time, hot showers and cold beer at Sunday barbeques. The Queenslanders who travel down well-maintained roads, receive quality hospital care and access to free schooling thanks to gas royalties paid to state. Queenslanders who own or work in local businesses and are able to enjoy the fruits of gas sector spending. Queensland’s land access laws strike a fair balance. A balance between providing the community the benefits from development of the state’s resource wealth, and respecting the rights of farmers to keep running their businesses. No one is saying that companies should have the right to place gas wells and associated infrastructure where it suits them. And it’s just not about gas. Farmers should have the right to determine who can come onto their land and when, whether they be in search of gas, minerals or coal and that is exactly what our current land access laws deliver. Resource companies are required by law to understand a farmer’s business and how they might affect that business before they enter the land. Resources companies are required by law to meet farmers’ reasonable valuation, legal and accounting costs. They are required by law to arrange compensation for any impacts on the farmer’s business, which both
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