The State Government has warned of gas shortages emerging in NSW within the next two years as it puts its weight behind coal seam gas to help the shortages.
Large numbers of Nationals and Liberal Party MPs are opposed to allowing the widespread use of coal seam gas due to environmental concerns, especially over the likely impact in farming areas.
At the same time, oil and gas reserves in the Bass Strait, are running out, which will place further pressure on NSW to find additional sources of gas.
The warnings come as the power industry is moving to use gas to replace coal as its preferred source of energy to generate electricity as a result of the carbon tax which is to begin from midyear and may make it uneconomic to use coal.
In the submission, the NSW government has endorsed this shift, saying that using gas to generate electricity is likely to emerge as the ”transition option to a low carbon economy”.
As a result, gas demand might triple over the next two decades, it said, which would place additional stress on existing gas supplies and drive the need for new sources to be found and developed, the state government said.
Long-term contracts to supply gas to NSW, principally from the Cooper Basin in central Australia, begin expiring from 2014, with large additional volumes of gas needed from around 2016 and 2017, at a time when the boom in export gas projects in Queensland will leave NSW gas consumers increasingly at risk, unless large additional sources of gas are found.