“There is plenty of gas available, both LNG and CSG, if it can be developed but the problem with relying on gas is that you need to keep drilling to find it,” one conference participant told Australian Coal Report.
“This can be an expensive exercise and there is no guarantee each drill hole is going to reap the rewards you are after to make it cost efficient.”
And while the gas was there, falling domestic demand meant investing in new infrastructure to develop the gas reserves and gas-fired power plants was increasingly seen as a gamble.
“There was 14,525MW of new gas-fired generation planned, but none of it now seems to be going ahead,” Greg Everett, CEO of Delta Electricity, a company which is one of the largest capacity electricity generators in Australia, told the conference.
“The reason we had so much new capacity planned is really quite appalling; it’s a case of bad forecasting.”
The result, he said, was that “coal is still king” when it comes to Australia’s power generation mix.
But refurbishing coal-fired power stations – a much more cost effective proposition than building new gas-fired power plants and necessary if future demand is to be met – had proven to be politically unpopular.
“The industry knows this needs to happen, government knows this needs to happen, but no government seeking to score points with the electorate is going to come out and publicly support this right now,” another conference attendee told ACR.
“It is a mad situation really. Decisions need to be made and it is clear to many that coal will remain completely dominant in terms of power generation, but political and environmental approvals are going to become more and more difficult to secure in the future.”
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