Horror heatwave blackout fears for Victoria

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Originally Posted by gusthedog

I think the initial issue with gas is that we have sold all our gas to the overseas markets and have long contracts with quotas to meet. We don't have enough to meet domestic demand. I notice Japan buys our gas cheaper than we can! Therefore gas isn't cheap.

Gotta love a country that's "uniquely stupid"

Natural gas: How Australia is being screwed

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Well, there's a couple of contradictory arguments being run in that article, and others by the analyst they quote. About the only thing that isn't contestable in the article is that WA artificially holds domestic prices low by requiring a domestic reserve at a set price, which Victoria doesn't do. Of course, if Vic did do that it'd be criticised for it.

The thing to understand in relation to claims that the prices our gas customers pay is less than we are is that each set of gas supply contracts are long term and are priced at the market at the time, so it's always going to be the case that prices may later look really cheap or really expensive. So, if you look at one set of contracts you can say that Japan is getting the gas cheaper than us, but there may be other contracts where they're paying more.

For the record, Australian producers are, in my experience, pretty aggressive in their negotiations of these things. The problem with pricing is the "black swan" events like US shale gas - as an example, at one point BHP was going to build a floating LNG terminal off the Californian coast. It was going to be really, really expensive with lots of environmental issues, but it was worth it because of the very, very high prices being paid in the US for gas. And then all of a sudden shale gas came on line, US prices plummeted and the terminal was dropped.

all infrastructure needs maintenance, not just coal.

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Originally Posted by Eevo

all infrastructure needs maintenance, not just coal.

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Did the subsidies stop?

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Originally Posted by gusthedog

I think the initial issue with gas is that we have sold all our gas to the overseas markets and have long contracts with quotas to meet. We don't have enough to meet domestic demand. I notice Japan buys our gas cheaper than we can! Therefore gas isn't cheap.

Gotta love a country that's "uniquely stupid"

Natural gas: How Australia is being screwed

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The reason for this is very simple. To get the money necessary to develop a gas field, you need to have a signed long term contract to take specified quantities of gas at a specified price, otherwise nobody (whether lenders or shareholders) is going to provide money - they need the assurance that the business they are providing money for is going to be viable. Exactly the same as if you are wanting money for any business venture, with the only difference being the sums involved.

The prices negotiated between the buyers and the developers were necessarily negotiated years, often decades, ahead of the contracted delivery, and because of the necessary large scale of LNG developments, involved very large sums of money and gas volumes. Prices reflected conditions at the time of negotiations.

No Australian entity (either industry or government) was prepared to sign a contract for gas that far ahead. (Or for the necessary volumes) Governments (usually state) always had the option to require some gas to be set aside for local use at specified prices, but this could have made some projects unable to be developed, so the gas would still not have been unavailable. As far as I know, WA is the only state to have done this.

Some states (including the ones mainly complaining about export of gas from other states) have contributed to the shortage by unnecessarily stopping or delaying exploration for gas.

Without the overseas buyers most of the fields would not have been developed, as the money to do so would not be available - local demand is too small to support development.

Queensland requires at least 15% of its electricity to be generated from gas, which has created a local base market. And it has reserved certain lease areas for the domestic market. That happened in the mid 1990s. The result is we are now the world's second largest exporter of gas.
It can be done, it just requires forward thinking governments. There is no reason for an energy shortage in this country. We are awash with energy. We just have to get smarter about using it.

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Originally Posted by DiscoMick

Queensland requires at least 15% of its electricity to be generated from gas, which has created a local base market. And it has reserved certain lease areas for the domestic market. That happened in the mid 1990s. The result is we are now the world's second largest exporter of gas.
It can be done, it just requires forward thinking governments. There is no reason for an energy shortage in this country. We are awash with energy. We just have to get smarter about using it.

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Yeah, that's why fracking is stuffing all the farm land up there. Gas is no better than coal IMO as far as the environmental damage it does extracting it. It's still a fossil fuel and not a long term answer.

No doubt nuclear will be in the picture in the future.
The scary thing about it is, the incompetent bureaucracy that runs the generation industry now, will still be in charge.
Combine that with the cheapest tender from China and you have a disaster looking for somewhere to happen.
Still want it in your backyard Homestar.?

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Originally Posted by V8Ian

No doubt nuclear will be in the picture in the future.
The scary thing about it is, the incompetent bureaucracy that runs the generation industry now, will still be in charge.
Combine that with the cheapest tender from China and you have a disaster looking for somewhere to happen.
Still want it in your backyard Homestar.?

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Geez,you can't say that.

But we all know its the truth.

Any other options?

Not many,if any.

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Originally Posted by scarry

Any other options?

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YouTube

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Originally Posted by V8Ian

YouTube

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Looks simple enough,surely they can't stuff that up, just feed and water it,and it keeps going,easy as.:Rolling: