2. 08/04/2017 Commercial-in-Confidence 2
NSW energy crisis – current position and challenges
• Gas – traditionally used by industry and consumers
• Challenge – shortage
• Sourcing – 95% imported from other states
• Security of supply – transported long distances by pipeline mainly from Bass Strait and the Cooper Basin
• Infrastructure constraints – limited pipeline competition and capacity
• Leading to – shortages/lack of firm contracts to supply industry
• Ddisincentive for investment
• Rising prices – highest in the world – LNG buyers paying $8-$9, today’s domgas price $10-$12 and rising
• Industry non-competitive – loss of businesses and jobs
• Household budgets under pressure
• Risk of gas shedding (power blackouts) in summer and winter
6. 08/04/2017 Commercial-in-Confidence 6
Gas is now critical for electricity generation
• Gas-fired power stations – now the best option for stabilizing the grid
• Low capital cost
• Short lead time – can be constructed quickly, within 12 months
• Can be turned on/off quickly – perfect complement to underpin renewables
• Small footprint – can be located close to demand
• Less than half the CO2 emissions of black coal and 70% lower emissions than brown coal
• Perfect for clean energy transition over next 20 years until effective
and competitive grid-based battery technology is developed
7. 08/04/2017 Commercial-in-Confidence 7
NSW energy solution
• Fast track Development Approval, construction and start-up of Narrabri Gas Project
• 1.2TCF proven resource
• A$2 billion investment
• Construct Hunter Gas Pipeline from Narrabri to Newcastle
• Development Approval already in place – shovel ready; MOU for construction and operation
with Jemena
• A$500 million investment
• Guarantees gas supply to Sydney Basin via Newcastle
• Guarantees gas for electricity generation
• 667MW Colongra power station on Central Coast
• Future power stations, already approved (2000MW Bayswater; 770MW Tomago)
• Future-proof NSW electricity grid
9. 08/04/2017 Commercial-in-Confidence 9
Benefits for NSW
• Gas to domestic market secured
• Gas supply for Colongra and future gas-fired power stations
• Security of gas supply makes NSW attractive investment destination
• Shorter, already-approved pipeline route means gas to market sooner and more
competitively
• Increased competition in east coast pipeline network
• Gas supply and industry opportunities for towns along route – Upper Hunter, Scone,
Muswellbrook, Singleton
• $2.5 billion capital spend for NSW economy
• Ongoing revenue from gas royalties for NSW Treasury
10. 08/04/2017 Commercial-in-Confidence 10
What can NSW Government do?
• Fast track Development Approval of Narrabri Gas Project
• Consider condition that gas (at least 50PJ per annum) must be used to supply
domestic NSW market, particularly Hunter and Sydney basin
• Ensure environmental conditions allow construction immediately and cost-
effectively
• Consider condition that there must be an open, competitive process for pipeline
transportation
• Hunter Gas Pipeline very competitive – already-approved, shorter route to
market