Gas Industry

The Hon. T.R. KENYON (Newland) (15:08): My question is to the Minister for Mineral Resources and Energy. What steps is the government taking to ensure gas production in this state meets demand and keeps downward pressure on prices?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (15:08): Mr Speaker, you would be aware that at a national level there has been a great deal of concern raised about the looming shortfall of gas supplies on the east coast. In a nation with such an abundance of natural resources, it is unimaginable that Australia could face shortfalls in the supply of gas. Indeed, it would be idiocy.

These shortfalls mean that industrial and even residential customers are facing spiralling prices as gas is locked up in the ground. It is an unacceptable situation that has been exacerbated by bans on onshore exploration and gas production. These bans defy the science that has again and again shown that, appropriately regulated—

Mr Bell interjecting:

The Hon. A. KOUTSANTONIS: —we can minimise risks in the gas extraction industry to acceptable levels.

The SPEAKER: I call the member for Mount Gambier to order.

The Hon. A. KOUTSANTONIS: The Prime Minister has written this week to New South Wales, Victoria and the Northern Territory to urge those respective governments to remove these unnecessary obstacles. Notably absent from the list of correspondents is South Australia, and that is because in South Australia—at least on this side of the house—we acknowledge that the best way to keep downward pressure on prices is to encourage supply, not threaten bans on exploration in the South-East, where the Otway Basin has had a long history of safe gas production.

The Prime Minister has described the inaction by some state governments to develop gas resources as a 'comprehensive failure'. In a letter to the NT Chief Minister, Mr Turnbull was reported to state that their government's fracking moratorium is 'putting our energy security, industry and Australian jobs at risk.' At an Australian Financial Review business summit in March the Prime Minister also remarked:

We are facing an energy crisis because of these restrictions on gas. What we have now is a scarcity of gas driven by politics because state governments are not allowing exploration and development of onshore gas.

Even the federal energy minister said that states must face up to the effects that 'mindless moratoriums' are having on power prices. Perhaps members opposite should pay attention to their colleagues' advice so that they do not inadvertently exacerbate the crisis, in the unlikely event that they have to cobble together a government.

The success of the $24 million first round of PACE gas grants prompted the government to offer a second round of grants to energy companies to accelerate projects that can supply gas to the local market. Grant recipients are required to offer discovered gas initially to local generators, and then industrial customers and households before it can be offered to the offshore or interstate market. By the close of applications for round two, 15 applications had been received on behalf of 11 companies through six operators, representing a strong diversity of projects. They are being assessed to ensure they meet the criteria and we will announce the successful applicants next month. I will update the house on the outcome.

Meanwhile, all projects that have received first round grant funds are proceeding on schedule, including Beach Energy's Haselgrove 3 well in the Otway Basin, where drilling began last week and which should take about eight weeks to complete. I would like to take this opportunity to again thank and congratulate Beach Energy, a proud South Australian company that employs South Australians and is headquartered here, on their acquisition of Lattice Energy and their investment in the South-East of our state.