NATURAL GAS — THE AUSTRALIAN INCENTIVE

Abstract

In recent years finding natural gas in Australia has been worth little more than a dry hole. However, establishment of a centralized buying authority with unitary pricing at, or below, today's levels in conjunction with an independent transmission authority could change that.

A capital outlay of approximately A$5 billion (1983 dollar) would be required to establish 5000 km of new nationwide gas transmission lines. Funds for the construction would be raised through issuance of inflation-indexed 30-year bonds, retired by transmission revenues and royalty assignments. Social benefits would arise from the approximately 8500 jobs created by the system's construction and a flow-through of up to 35 000 jobs in related industries subsequent to 1990.

When the delivery system was in place adequate demand and supply would be assured by virtue of a pricing system which is based upon the encouragement of the 'export substitution' of other forms of primary energy, as well as energy by-products. At a consumer price level of A$5.25 per gigajoule, inclusive of transmission costs of A$3.00 per gigajoule, an increase of 60 petajoules per annum in excess of current consumption estimates of 400 petajoules per annum would be sufficient to render the system economic. Necessary increases in natural gas demand would come from electric plant conversions, primary manufacturing energy conversions, motor transport conversions, export of chemical derivatives, etc. Thus, the more readily transportable, hence marketable, primary energy sources — coal and crude oil — would have a market effect on the balance of payments/trade position.

Thus, we take an 'excess' energy form in a nation which today is still dependent upon outside sources of liquid fuels and convert it to an 'energy independence' form, while creating simultaneous nationwide social benefits.