Gas Industry

The Hon. T.R. KENYON (Newland) (14:48): My question is to the Minister for Mineral Resources and Energy. Minister, can you update the house on the government's initiatives to increase supply of affordable gas to the South Australian market?

The SPEAKER: Is the minister able to help the house with that?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:48): I will do my best to assist, sir. PACE Gas is one of the six key initiatives that comprise Our Energy Plan. The initiative centres on providing incentives to source and use more South Australian gas to generate our own electricity. Put simply, we want to increase the supply of affordable gas to local gas users—first, to electricity generators, then manufacturers and then retail customers—to put downward pressure on energy prices for all South Australian customers because we are a gas state.

The government is committed to incentivising projects that have the greatest likelihood of securing new and significant gas supplies to South Australian customers by the end of 2020. It is with this in mind that the government initiated round 1 of the PACE Gas initiative that led to grants being awarded to five exploration and production projects.

Those projects together shared $24 million of state government funding to accelerate those projects that aim to bring forward gas supplies to the state. Together, these grants are generating up to $174 million worth of new investment by oil and gas companies in local production projects either in the Cooper Basin or the Otway Basin—a great play in the Otway Basin. I am pleased to report that progress is underway in these projects.

Beach Energy has recently announced the location of their Haselgrove-3 gas exploration well near Penola in the state's South-East. Haselgrove-3 is expected to begin drilling next month and, if successful, gas can be delivered to local enterprises at prices below what they are currently paying at a time when prices elsewhere are rising nationally. I can confidently say that because of the well's proximity to local markets and existing infrastructure, which means lower pipeline tariffs due to the shorter distance to the markets in the South-East. On the strength of the business bids received in round 1, I announced a second round of funding for PACE Gas grants, and applications for those grants closed on 1 August.

There has been a strong response to the second round of grants, with a total of 15 applications lodged on behalf of 11 companies through six operators representing a diversity of projects. The applications in aggregate represent considerably more than the $24 million in grants offered in PACE Gas round 2, and that bodes well for contestability of what will be determined to the highest ranked projects. These applications will be rigorously assessed, and successful applicants are due to be announced by October.

I look forward to these grants bringing forward a diversity of high-quality gas projects that will help maintain downward pressure on power prices for all South Australians because gas overwhelmingly across the country is now beginning to set the price of electricity. Policies of banning gas or gas exploration or locking gas in the ground are pushing power prices up.

Any party, whether it is the Northern Territory Labor government or the New South Wales Liberal government, that attempts to lock gas in the ground is having an impact on electricity prices. Anyone who attempts to block this gas in the ground has to answer to constituents with higher power prices. Treasurer Morrison has threatened to cut GST grants to the states on the basis of their ability to have policies that allow for the exploration of gas products in South Australia.