Coal seam protests forcing gas prices up: industry

The head of clay and concrete manufacturer Brickworks is warning of a severe gas shortage in Australia, as the bulk of locally produced gas is exported.

Brickworks' managing director, Lindsay Partridge, says Australian gas producers are getting top dollar from Asia, so they would rather export gas than supply the domestic market.

Mr Partridge says the process to approve new Coal Seam Gas operations is too slow and the Federal Government needs to intervene.

"The solution is to accelerate as a matter of urgency the new gas fields coming on line.

There's plenty of gas in Australia, it's just got to be brought on line and that's what needs to happen," he argued.

"The other part of it is there's most probably many gas fields around the country, which are undeveloped, which aren't in a position that's commercial for export, and it's clear those are the ones that should be brought on line then for domestic and residential consumption." Mr Partridge says Australia should have enough gas in the longer term, but he is particularly worried about the next few years.

"I think in the latter part of this decade there will be plentiful gas," he said.

"It's just through this intervening period - most probably between about 2015-2016 - we're going to have this very tight sort of period, but you can't just close down your business for two years or three years and then come back." Gas reservation? Some manufacturing leaders have called for a reservation policy, that would see a proportion of Australian gas production set aside for domestic industry.

However, the Federal Resources and Energy Minister Martin Ferguson says such an approach is unlikely to work.

"Australia is blessed with abundant gas resources – the key challenge is getting this gas out of the ground and into the market," he noted in a statement.

"The best way of doing this is through markets – where price is allowed to balance against demand and provide incentives for developing new supply.

"Interventions such as reservation policies to force price or supply outcomes are more likely to impede than promote supply." Mr Partridge says the best thing governments - both state and federal - could do would be to speed up approval processes for new gas wells.

He says protests against coal seam gas appear to have slowed the development of more wells, and limited new gas supply.

"The anti-coal seam gas lobby has stopped or delayed the timely production of gas, as well as a very complicated process where many of these wells have to go through both state and federal approval process," Mr Partridge said.

"So we have the Government saying, 'oh we don't want to get involved in the gas market', but they already are.

They're part of the process which is stopping the timely supply of gas coming on line."

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