Interview with Paul Culliver, ABC Capricornia
16 September 2020
Subject: Gas, basin development, carbon emissions targets, hydrogen.
PAUL CULLIVER: Keith Pitt is the Federal Minister for Resources, Water and Northern Australia. Good morning to you.
KEITH PITT: Good morning to you and good morning to your listeners.
PAUL CULLIVER: What's the benefit to Queensland here?
KEITH PITT: Well, firstly, we've got a plan to look at establishing five new basins - three of those are in Queensland and that means more jobs for Queenslanders and certainly more money into the local economy.
PAUL CULLIVER: All right. What happens there? How do you establish new basins?
KEITH PITT: Well, fundamentally, it's about exploration. You need to firm up the resource to ensure that there's- what people think is there is actually there. The Beetaloo Basin in the Northern Territory will be the first priority, and then of course across to the North Bowen and the Galilee Basin in Queensland. We've put up $28 million to get that plan established. But obviously, there are acreages and areas that are currently held by private companies and we'll certainly be looking to encourage them to continue that exploration because more supply into the market means better prices for customers.
PAUL CULLIVER: Does this gas need to be used in the domestic market? What are the rules there?
KEITH PITT: Well there's a couple of rules there. We have what's called the ADGSM, which is the Australian Domestic Gas Safety Mechanism, which can be triggered by me as the Federal Minister. We also have this agreement with the three very large LNG companies that are exporting out of Queensland. And we need to look at this industry. I mean the LNG industry has grown to $49 billion worth a year just 12 months ago, from basically a standing start more than 10 years ago. So it's been a phenomenal ride. We need to ensure that gas is provided for domestic consumers as well at a price which is affordable for them, and of course the price which is competitive for those who are doing the exploration and delivery.
PAUL CULLIVER: So yeah, just to talk through that because I mean if the Federal Government is supporting exploration that's leading to gas that's just going to be exported, people might not see that as a useful expenditure of Federal Government money. So is that not what's going to happen here?
KEITH PITT: Well there's a number of issues inside the announcement yesterday, including the establishment of what's the equivalent of a Henry Hub at Wallumbilla, that we will be developing a pipeline plan to ensure that we can address where there are shortfalls and there's constrictions in terms of the deliverability of gas, and looking at how we connect up some of these big fields - particularly out of the Beetaloo in Queensland - to consumers. And that means we can drive manufacturers back onshore - if they're internationally competitive, well, they'll certainly be operating in Australia.
PAUL CULLIVER: There's no shortage of environmental groups and pro-renewable groups that have come out in reaction to this saying- well, in fact, I think the Climate Council said that this plan stinks. They say: look, we don't need gas. We- it's a fossil fuel. We're already transitioning to renewable energy. You can look at all sorts of baseload options through batteries, pumped hydro, all sorts of things. Why put your lot behind gas and not renewable energy?
KEITH PITT: Well wind and solar is intermittent. It can't be used reliably. It's not reliable. It's certainly- you look at the South Australian experiment where we've had basically unrestricted installation of intermittent wind and solar and what that's done to the network and pricing in South Australia. So we need to ensure that those installation [indistinct]-
PAUL CULLIVER: [Interrupts] South Australia's been stable since they installed that big battery. They haven't had a blackout since they even started increasing more storage in the grid.
KEITH PITT: Well, with all due respect, that's just not true. One very small battery does not make a network and it certainly doesn't deliver reliability for an entire state.
PAUL CULLIVER: Okay. But they have a very reliable grid right now to be clear.
KEITH PITT: No, that's not true. So, I'm very happy to go and find the details on that. So, let's look at instability. If you're going to rely on the weather to run Australia's economy, well we're going to have some significant challenges. So what we've said is that we'll install a 1000 megawatt peaking plant in New South Wales if industry does not. Now let's be frank, this has been running now for a number of years. Industry in other parts of the country have not installed very large new generation in terms of peakers, with capacity for backup for intermittent wind and solar. Queensland's got a great advantage - they have one of the youngest coal fleets in the country, they continue to be able to price affordably. But once again, domestic prices do need to come down. The wholesale price has been significantly suppressed now for quite some time, yet Queensland Labor has not passed that on to consumers and customers. So I think there's an ability now for Queensland to make decisions which help all Queenslanders in terms of their cost of living and the cost of their business in a time where it's absolutely necessary, and I'd like to see them do it.
PAUL CULLIVER: How quickly do you expect new gas to be flowing from these basins?
KEITH PITT: Well, in terms of the generators themselves there's an expectation you can build one in around three years. In terms of the Beetaloo Basin and others, once again it comes down to exploration and how successful they are, and how much money gets invested. But once the resource is firmed up it will move very quickly in my view. So the Government's put forward money to establish the connection plan in terms of the gas infrastructure and pipelines for delivery of more gas into the market. We've put forward opportunities around those pipes basin plants, and of course working with GISERA which is CSIRO's combination with industry and others - which are about putting the facts on the table for gas. So we don't want to see these scare campaigns run again, which are not based on fact and GISERA will be out there doing that work.
PAUL CULLIVER: What's the business case here, especially given that we are obviously increasing renewable energy, more batteries being planned even for Queensland which will increase reliability in the grid. If the gas isn't going to flow for another three years we're going to see an uptick in renewable energy in that time - an increase of power being supplied through renewable energy. Do you risk having an oversupply of gas in not too many years away?
KEITH PITT: Well the forecast is that in the midterm there will be a shortage of gas right across the country - that's certainly what's being forecast only recently. So we're looking to ensure that that potential shortfall is addressed, and we've obviously got a very large export industry as well which is why we have the ADGSM in place, that's why we have the Heads of Agreement which will be renegotiated again in coming months. And we're also looking at domestic gas reservation policies, of which some states already have. So we want to ensure that Australia's gas is utilised for Australia's purposes - but clearly there is an export market as well.
PAUL CULLIVER: But what happens next? You know, say in 10 years where domestic gas use may well have fallen quite significantly, we're still producing way more because of these policies, does that leave us with an oversupply of gas? Is that a problem for us?
KEITH PITT: Well as I've said, we already have a $49 billion market, the majority of which is exported because currently Australia's domestic market is not that big. But once again, if we bring manufacturing back onshore, there's lots of produce which is- product which are built through gas and utilising gas as a feedstock. The more of that we've got onshore, the more jobs we have, the more opportunities that for Australians and that's what we're looking at a gas led recovery.
PAUL CULLIVER: Keith Pitt is the Minister for Resources, Water and Northern Australia and your guest this morning here on ABC Capricornia. Paul Culliver with you. If you want have your say, 0487-993-222. With the reliance on burning gas into the future to keep, obviously, our electricity supply in Australia, what does that do to our emissions commitments globally?
KEITH PITT: Well, the advice I have is that we are well on track to meet the 2030 target which we've committed to. In fact, we'll do it in a canter.
PAUL CULLIVER: Okay. What is the modelling here? If we're going to increase our reliance on gas, how do we know we are going to meet that 2030 commitment?
KEITH PITT: Well this is the advice that's coming from the emission- the Minister for Emissions Reduction, Angus Taylor, and his office, and department, they're the ones that look at the modelling and making those assessments in those cases. And what they stated very clearly is that Australia will meet its 2030 target and will do it quite easily.
PAUL CULLIVER: Okay. Even with an increased use of gas in the market?
KEITH PITT: That's the expectation.
PAUL CULLIVER: Alright. What comes to Queensland? What kind of jobs are opened up here?
KEITH PITT: Well I think you only need to look at history. So when the LNG plants, for example, were constructed; when a lot of work was done in terms of, you know, drilling operations and connecting up pipelines there was an absolute boom in the gas industry. And I expect that that will be mirrored in our plans for a gas-fired recovery, particularly for the Northern Barwon Basin, Galilee, and of course the pipelines that will need to be constructed to ensure that this gas is supplied to market at a competitive price. It's all about jobs; it's all about opportunities for Australians and we're certainly heading in the right direction.
PAUL CULLIVER: Yeah. What pipelines will need to be built here in Central Queensland?
KEITH PITT: Well that's yet to be established. There was a commitment inside yesterday's announcement that some money is being put forward to ensure that we can develop that plan, and then we can move on from there to look at whether - quite simply we need to intervene and build those gas pipelines, whether they need to be underwritten or whether industry comes to the party and builds what's necessary.
PAUL CULLIVER: Australia's Chief Scientist, Alan Finkel, certainly flagged that gas infrastructure can, in the future be used for hydrogen. Obviously, there's a big interest in Gladstone to produce hydrogen. Yeah. What kind of mind is put to that in terms of making sure the gas infrastructure can be used for different purposes into the future?
KEITH PITT: Well look, I'm not a gas pipeline engineer. I can't tell you whether they can be used the hydrogen or not. But what I do know is that hydrogen is a big part of the technology roadmap. Minister Taylor has got more to say on that in coming weeks. And certainly, hydrogen will be part of the technology roadmap we're looking at for energy use in the future.
PAUL CULLIVER: Alright. Minister, thank you so much for your time today.
KEITH PITT: Great to be with you.
PAUL CULLIVER: The Minister for Resources, Water and Northern Australia, Keith Pitt, your guest this morning.