NSW coal seam gas reserves must be tapped despite the latest forecast showing gas shortfalls are highly unlikely for at least 20 years, the Baird government says, signalling bruising election results in the bush have not dented Coalition support for the polarising industry.
A fortnight after a community backlash over coal seam gas contributed to massive swings against government MPs in regional NSW, and helped the Greens oust the Nationals in the north coast seat of Ballina, Resources and Energy Minister Anthony Roberts insisted the state needs more gas projects to keep energy prices down.
The vow comes despite a new report by the Australian Energy Market Operator, manager of the national electricity market, which revised its earlier prediction of a short-term gas supply gap in NSW and said shortages are not expected in the short, medium or long term.
It means even if no new gas projects proceed in NSW, the state's homes, industries and businesses would not run out of gas in the next two decades.
The government's gas policy released last year emphasised predictions of potential gas shortages.
It promised to secure the state's gas supplies and improve regulation. But key detail, including where in the state drilling would be allowed, has not yet been revealed.
In its latest report AEMO, whose data the government relies upon to make gas supply decisions, said shortages in NSW before 2034 are not expected – a forecast at odds with previous predictions.
The change is partly due to a drop in forecast gas use, mostly by industrial users struggling with rising gas prices. Other factors includea new gas storage facility at Newcastle and an expanded pipeline from Victoria, and better data that allowed more detailed modelling.
Also, at times of high demand in NSW, gas exported to South Australia's Moomba storage facility could be returned to this state through an upgraded pipeline.
The report excluded two active NSW coal seam gas projects – AGL's Gloucester operation and Santos' facility near Narrabri – because they are not considered "committed projects". Both controversial ventures are seeking to expand.
The forecast came as the Australian Competition and Consumer Commission announced it would hold a year-long inquiry into whether wholesale gas prices on the east coast and South Australia are being driven up by insufficient competition.
A spokesman for Mr Roberts said while the potential for a gas shortfall was now "much less likely" manufacturers and other businesses were suffering.
"To put downward pressure on energy prices we need the growth of viable gas projects. It's that simple," he said. The NSW Business Chamber echoed his view.
However the Independent Pricing and Regulatory Tribunal has previously questioned the link between prices and developing the state's gas reserves, saying international demand would have a bigger impact on prices.
NSW Greens MP Jeremy Buckingham said the revised forecast showed coal seam gas development was unnecessary, adding the industry "has been comprehensively rejected by voters, and is not worth the risk to land and water".
Labor and Lock the Gate Alliance said the gas prediction cast doubt on the government's gas strategy.
A spokesman for the Australian Petroleum Production and Exploration Association said "further development of NSW gas projects is the clearest way to put downward pressure on gas prices and provide energy security for the state".