Future Gas Strategy: consultation paper

Advent Energy Limited (ABN 39 109 955 400)

Unit 12, Level 1, 114 Cedric St, Stirling, Perth, WA 6021 Australia

Secretary
Department of Industry, Science and Resources
Canberra ACT 2600

Email: gasoptions@industry.gov.au

27 November 2023

Dear Secretary,

Future Gas Strategy consultation paper

Advent Energy welcomes the opportunity to make comment on the Australian Government’s Future
Gas Strategy consultation paper.

We have submitted a response to the online questionnaire and in this document provide our responses to some of the direct questions contained in the consultation paper.

Background

Advent Energy is an investee company of BPH Energy, an Australian company listed on the Australian
Stock Exchange in 2004. Advent has a portfolio of assets onshore and offshore Australia, where an estimated $88 million has been spent on exploration to date. Advent Energy is a member of
Australian Energy Producers, formerly known as APPEA.

Advent, through its wholly owned subsidiary Asset Energy, has an 85% interest in the PEP-11 exploration licence which lies in federal waters off the coast of New South Wales and is currently going through the process of re-applying to have the licence extended, following the Federal Court overruling a previous decision by the former Prime Minister Morrison to deny the extension.

The terms of the licence allow for Advent to explore for natural gas, this includes activities such as geological, geochemical and geophysical studies and the drilling of exploration and appraisal wells.
All of those activities require specific environmental approvals from the independent regulator, the
National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

The current licence does not allow for production of any commercial gas resources that may be discovered, that is a separate process whereby the exploration licence is converted to a production licence.

Significant geoscience work has been carried out before and after Advent acquired its interest in the licence in 2004, including the drilling of the New Seaclem-1 well in 2010, with zero safety or environmental incidents.

Prospective gas resources have been identified in PEP-11 of 5.7 TCF1 across multiple structures along the continental shelf.

1 Berge 2010, Independent Expert Report - Permo Triassic, as released by MEC Resources to the ASX 22nd December 2010

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The prospective resource we are seeking to develop, if proven, has the possibility of supplying NSW families and businesses with the bulk of their gas needs for 20 years – supporting the State’s energy transition and helping reduce energy costs.

It is the submission of Advent Energy that Australia, and particularly eastern Australia, needs the development of new natural gas resources to meet the ongoing needs of its homes and businesses, and that there is no environmental, safety or other reason to prevent exploration and production occurring in Federal waters offshore the state.

The urgent need for new sources of natural gas has been repeatedly stressed in a significant number of reports, some of which are detailed in this submission.

It is in this context that the Advent Energy has formulated our answers to questions listed below.

Responses to questions to producers contained in consultation paper

12. What do you see as the role of gas in Australia’s net-zero transformation?

• Gas has a critical role to play in Australia’s net-zero transformation. Gas provides a low
emissions, abundant and flexible energy source that is available today. Gas is uniquely able
to provide energy at scale to fill gaps between demand and energy supply from intermittent
renewable energy sources like wind and solar.
• The International Energy Agency2 this month released a report highlighting that new oil and
gas investments will still be needed for the world to hit net zero emissions goals, and with
the gas playing a critical role in ensuring global energy security.
• The Australian Energy Market Operator’s 2022 Integrated System Plan3 (ISP) highlights the
critical role that gas will play “as coal-fired generation retires” in providing electricity supply
in peak demand periods and in “firming” intermittent power supply from renewables,
particularly solar and wind. Gas will complement battery and pumped hydro generation in
what AEMO calls “long ‘dark and still’ periods.”
• The Integrated System Plan says the NEM will need to “treble the firming capacity from
dispatchable storage, hydro and gas-fired generation to firm renewables.”
• The ISP says generation from gas-fired peaking plants will increase from 7 GW in 2022 to 10
GW in 2050. This compares with the current capacity of 11 GW from gas-fired and liquid-
fuelled (mainly diesel) generation.
• The ISP said:
o “Gas... will provide essential system power system services to maintain grid security
and stability.”
o “This critical need for peaking gas fired generation will remain through the ISP time
horizon to 2050.”
o “Additional and earlier peaking gas fired generation would add resilience against
potential shortfalls in VRE, storage, DER or transmission.”

2 The Oil and Gas Industry in Net Zero Transitions – Analysis - IEA

3 2022-integrated-system-plan-isp.pdf (aemo.com.au)

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The importance of gas has also been recognised by Australia’s most senior political leaders:

• The Prime Minister the Hon Anthony Albanese MP said that “gas will play a role in
renewables”4 when defending the role that gas will play in the transition to clean energy.
• The Hon Madeleine King MP correctly noted that:
o In the short term, medium term and long term we will need gas. You need gas to
process critical minerals and rare earths which are essential for clean energy
technology5.
• The Hon Chris Bowen MP said that:
o Gas is a flexible fuel necessary for peaking and firming as we undertake this
transformation [to the government’s renewables target]6.
• The Hon Dr Jim Chalmers MP noted that the gas industry is a “really important”7 part of the
nation’s economy, and that the Commonwealth Government is working on increasing gas
supply8 to combat rising energy prices.9

Closely related to the need for Australia to have new gas supply is the fact that a lack of gas supply is a key driver of inflation. As Dr Phillip Lowe, the former Governor of the Reserve Bank of Australia, said in a Senate Estimates Hearing10:

• One way of tackling inflation induced by supply-side shocks is to address the supply side. At
the moment there are two areas I think we could be focusing on. It's the supply of gas and
electricity in the domestic market—what we can constructively do to increase the supply. I
don't want to get drawn into what the right measures are, but just at the analytical level,
increased supply of gas and electricity in the domestic market would be helpful.

4
AFR Business Summit (7 March 2023) accessible at: https://www.pm.gov.au/media/afr-business-summit-0

5Interview with Tom Connell, Sky News (15 February 2023) accessible at: https://www.minister.industry.gov.au/ministers/king/transcripts/interview-tom-connell-sky-news

6Address to the Sydney Institute (13 March 2023) accessible at: https://minister.dcceew.gov.au/bowen/speeches/address- sydney-institute

7Press Conference, Blue Room, Canberra (25 January 2023) accessible at: https://ministers.treasury.gov.au/ministers/jim- chalmers-2022/transcripts/press-conference-blue-room-canberra-1

8 For example, Interview with Neil Mitchell, 3AW (26 October 2022) accessible at https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-neil-mitchell-3aw-0;

9Interview with David Speers, Insiders ABC (30 October 2022) accessible at: https://ministers.treasury.gov.au/ministers/jim- chalmers-2022/transcripts/interview-david-speers-insiders-abc-0

10
Commonwealth of Australia, Official Committee Hansard (Senate): Economics Legislation Committee (Monday, 28
November 2022) p4.

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13. What action is your industry or company taking to reduce greenhouse gas emissions and does gas use have a role to play?

• While not yet able to commence exploration or production activities, Advent Energy will
pursue global best practice in sustainable industry operations.
• The potential development of significant gas resources less than 50km offshore a still coal-
dependent region can assist in reducing emissions from power generation and
manufacturing in the Hunter and more broadly across NSW.
• The potential to develop carbon storage reservoirs in the same region we seek to produce
gas supply could have a significant role in decarbonising the Hunter region.
• New South Wales has the largest concentration of anthropogenic carbon dioxide (CO2)
emissions sources in Australia.
• Carbon capture and Storage (CCS) is a pragmatic way to substantially reduce NSW’s
greenhouse gas emissions.
• Proximity of the disposal reservoir to the CO2 sources is a critical component to reducing the
cost for compression, transportation and storage of the CO2. The proposed Baleen prospect
well (Seablue1) is located less than 25km off the coast of NSW. This is close enough that the
compression facilities can be located onshore, and a pipeline can be run directly to the
disposal reservoir.

Several independent studies have identified the potential for CO2 storage potential offshore NSW.
Geoscience Australia, through the Cooperative Research Centre for Greenhouse Gas Technologies
(CO2CRC) issued a report in June 2005 entitled “New South Wales – Deep Saline Aquifer Storage
Potential” (Patchett and Langford, 2005). This study concluded that the Sydney Basin contains deep saline aquifers which have the potential for CO2 storage. A study by Sayers, Kernich and Dance entitled “Geosequestration investigations – offshore New South Wales, Australia” showed potential geological storage sites offshore Sydney Basin. The Seablue1 well location coincides with a potential storage site identified in this paper.

Geologically, the structural and stratigraphic play-types located in the Permian to Triassic sediments are envisaged as the injection targets for CO2 storage. The paper by Sayers et al. (2004) specifically states that, although encouraging, the potential of these sites for CO2 storage potential cannot be assessed until the geology is confirmed by drilling. If a suitable CCS reservoir is identified, Australia and especially NSW could significantly reduce its carbon emissions.

The specific tangible business and economic benefits include:

• Potential to extend the life of existing power stations.
• Potential to improve the long-term viability of additional heavy industry in western Sydney
and the Hunter and Illawarra regions of NSW.
• Hydrogen production opportunities can expand as it can be produced cleanly from coal and
gas when coupled with carbon capture and storage. Currently, almost all of the world’s
hydrogen is produced from gas and coal.
• Carbon trading opportunities
• Jobs created directly from implementing the full CCS project once a suitable reservoir is
identified.

Advent Energy has already invested in turquoise hydrogen production through its subsidiary Clean
Hydrogen Technologies (CHT).

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CHT is developing its Turquoise Hydrogen “Commercial System” where it will satisfy scale and commercial objectives resulting in the development of income from sale of Clean Hydrogen
Products. Clean Hydrogen’s Commercial System means an end-to-end system which consumes and processes hydrocarbons, using Clean Hydrogen's own thermocatalytic reactor process and Clean
Hydrogen's catalysts to produce hydrogen at commercial scale, enabling the sale of the Clean
Hydrogen Products (being hydrogen and carbon black).

14. How can Australian LNG accelerate global decarbonisation without compromising energy security or affordability?

Australian exports of LNG have a critical role to play in supporting the energy transition of many trading partners still dependent on coal-fired power generation. To continue this role without compromising our own energy security and affordability, Australia must enable the development of new resources to meet domestic demand. It is important to note that gas resources close to demand centres can be delivered to customers at lower cost.

As the Future Gas Strategy consultation paper notes:

• Australian gas, exported as LNG, plays a central role in regional energy security. Recent global
events have increased the importance of Australia as a trusted energy export partner both in
the short- and longer-term. Around 70% of Australia’s gas production is exported, mainly on
long-term contracts into East Asia (Japan, China, Republic of Korea and Taiwan).
• Gas and energy demand growth will likely be strongest and most sustained in Asia. Many
Asian economies are driving domestic decarbonisation agendas. For example, by switching
from coal to gas and supporting variable renewable (solar and wind) roll-out with gas-fired
generation. These economies are making these changes simultaneously with strong energy
demand growth. This means that in some cases, overall demand for gas may grow even as its
share of an economy’s energy mix shrinks.
• Maintaining investment flows will be critical to maintaining gas and LNG supply.

16. Does current gas transport and storage infrastructure support the changing role of gas in the residential and commercial sector? If inadequate, what is needed and who should provide the change?

• As the DISR Consultation Paper notes: “On the east coast, the gas transmission system
was developed to transport gas from south to north. This is because a large proportion
of the gas that Australians have used over the past fifty years was sourced from offshore
gas fields in Victoria.”
• Changes to transmission and distribution networks to accommodate hydrogen or
increased transport of gas from northern to southern states, could require new
infrastructure.

Because of the proximity of PEP11 to the existing Sydney to Newcastle gas pipeline, development
of a gas project in PEP11 would mean minimal additional gas infrastructure would be required
and the PEP11 gas project could be linked into this NSW pipeline with approximately 30
kilometres of additional sub -seafloor pipeline to an existing gas /power industrial precinct at
Munmorah. This was outlined in Advent Energy’s submission to the recent NSW Parliamentary

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Inquiry into the Minerals Legislation Amendment (Offshore Drilling and Associated Infrastructure
Prohibition) Bill 202311, which attached as Appendix A.
22. How could the offshore petroleum regime be improved to meet the objectives of the strategy?

To ensure the timely development of resources the regulatory framework must effective and efficient.

Advent Energy would agree with the comment made by Australian Energy Producers on 27 October
2023:
• “Governments must ensure robust and timely approvals or risk shortages and upward
pressure on energy prices. Regulations that provide clarity and certainty for industry while
maintaining comprehensive and meaningful consultation with stakeholders are urgently
needed.”

23. What are the major barriers and opportunities for new supply? How can the Australian
Government prioritise, mitigate or manage these?

• A significant barrier to new gas supply is the increasing politicisation of approval processes.
• Advent Energy’s application to extend the term of PEP-11 was a clear case in point. Elected
politicians worked with environmental activists to seek to influence decision-making
ministers in an overt and contrived manner.
• It is important that we have a public discussion about resource development that is
grounded in fact. False and exaggerated claims do nothing to inform the sometimes difficult
and often complex issues that regulators must consider.
• Advent Energy’s successful Federal Court challenge to overturn the decision by former Prime
Minister Scott Morrison to appoint himself as resources minister and then use his powers to
refuse to extend PEP-11 highlighted the fraught and often irrational nature of the energy
policy making in this country.
• The court’s decision to quash that decision has paved the way for the permit to go back to
the federal and NSW governments for fresh review. It is our understanding the matter is now
with Joint Authority ministers for decision.
• It is to be hoped that ministers don’t again put politics before due process in deciding the
status of a permit that could see substantial new gas supply available to the Australian
domestic market.
• The importance of PEP-11 to delivering potential new gas supply to NSW was again
highlighted last week when Santos said it would delay final investment decision on its
Narrabri gas Project until 202512.

24. What are some of the opportunities for gas production in Australia in the medium (to
2035) and long term (to 2050)? How could these necessary developments support decarbonisation consistent with achieving emissions reductions goals?

• As highlighted in Figure 11 on page 21 of the Future Gas Strategy consultation paper,
Australia has many gas basins at various stages of development.

11
https://www.parliament.nsw.gov.au/ladocs/submissions/81795/Submission%2048%20-
%20Advent%20Energy.pdf
12
Energy News Bulletin, November 2023

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• It is important that gas resources close to demand centres can be developed and delivered to
customers at lower cost than more remote supply sources.
• Advent Energy believes that the offshore Sydney Basin must be considered highly among
potential sources of new gas supply.
• The Sydney Basin is a recognised gas basin as demonstrated on Figure 11 from the Future
Gas Strategy consultation paper.
• This has been confirmed in reports by Geoscience Australia13,Santos14, Ampolex15, CSIRO
Petroleum Research Division16 and the specialist Independent Expert report of Berge 201017
• Marlin18 reported (2015) PEP11 has been pursued since 1981 with the first offshore 2D
seismic survey. The nearest equivalent depth/age/commercial gas-condensate fields are
west of Brisbane in the Bowen Basin. 2D seismic data (2D) shows that the Permian aged
section of the Bowen Basin has conventional gas fields at similar time and depth to PEP11
at the Triassic/Permian age boundary that look similar in seismic amplitude strength on
regional 2D to PEP11. These fields have interbedded coal and gas sands in the Late
Permian that are probably correlative to the PEP11 Late Permian target.
• Ampolex (1992) identified the Baleen South Lead as one of their major targets. The
Baleen South Lead is located about 20km offshore (some 30km south-southeast of
Newcastle) on the crest of the “Offshore Uplift”. Unrisked reserves were estimated at
1560 BCF.
• The Baleen prospect in the northern portion of PEP-11 offshore the Lower Hunter is regarded
as the most prospective area for near-term gas development and is the target for the current
proposed drilling.
• The prospectivity of the Baleen area has been supported by CSIRO Petroleum research, who
were asked to analyze seismic line B415 (in PEP-11) and their summary slides on this parallel
line is shown to B418 is shown in presentation titled CSIRO Petroleum Research it confirms
the existence of three core (GAS) seismic attribute analyses (e.g. multiple collaborative
measurements) high amplitude bright spot reflections and attenuation of high frequencies in
instantaneous frequency plots and bright spot features in Root Mean Squared amplitude
plots

13
Geoscience Australia” NSW Continental Slope Survey. RV Southern Surveyor 10/2006 October 2006 Kriton
Glenn, Alix Post, Jock Keene, Ron Boyd et al.*

14
Santos 1993 The 1991 Seaspray Seismic report Grybowski D and Santos 1990 Geological and geophysical interpretation report . Grybowski D

15
Ampolex 1992 evolution &Hydrocarbon Prospectivity of the Offshore Sydney basin NSW Brdley G 1992

16
CSIRO Petroleum Research Report “Direct Hydrocarbon Indicators .ASX release MEC Resources 24 Sept 2009
& 9 Dec 2009

17Berge 2010, Independent Expert Report - Permo Triassic, released by MEC Resources to the ASX 22nd
December 2010

18
Marlin D Geological and Geophysical Basis for (Baleen)Exploration Well PEP11 release to ASX MEC Resources
Sept 2015

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35. What are your long-term business and investment plans beyond 2035? How might these affect local economies, employment, and communities?

• Advent Energy’s long-term investment plans can only be determined after further
exploration to determine the scale of future gas development.
• Gas exploration and development is a significant generator of employment and local
economic activity, but the main economic benefit comes from the use of gas production
within the local community.
• Business NSW estimates 250,000 jobs in NSW rely upon gas as a feedstock and energy
source. Gas supports thousands of jobs at BlueScope Steel, Brickworks, Orica, and other
companies. The presence of ethane in PEP-11 resource could also secure much-needed
supplies to the Qenos plastics plant in Port Botany.
• It is estimated there is over 5.7 tcf of gas off the coast of the Hunter, enough gas to provide
clean energy to NSW people and businesses for 20+ years.

36. Describe the projects or best practice examples of industry engagement with the local community, as well as the benefits these projects bring to the people and regional economy.

• Advent Energy has had sustained engagement with major gas users in the Hunter region for
several years. The company has also engaged frequently with local media to attempt to
balance public discussion on the benefits and impacts of gas exploration and development
offshore the Hunter.
• More formal engagement with local community will be undertaking when the status of the
permit has been confirmed and Advent is able to lodge its Environment Plan with the
independent regulator NOPSEMA, which has strict criteria for genuine engagement with all
impacted stakeholders.

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Comments on questions directed to other stakeholders
Consumers (domestic)

1. Do you use any international and/or domestic forecasts to inform your outlook of the gas
market? We want your views on which scenarios best reflect the demand outlook. Are there any
limitations or additional factors impacting the demand outlook you would like to note?
• While not a gas consumer, Advent Energy is in regular contact with gas users, particularly
in the NSW Hunter region.
• We follow closely international and domestic analysis of energy markets, particularly
future gas demand. All credible analysis points to a sustained global demand for gas for
decades to come. Independent energy research intelligence company Rystad Energy has
warned that the current existing gas fields will not meet the global gas demand as it is
projected to rise in the next decade – despite a 12.5% surge in gas output forecast by
2030 and rapid growth in renewable energy.
• In Australia, domestic gas demand may decline slightly, but only slightly, while supply
appears likely to fall significantly creating a dangerous shortage of a still critical energy
source.
• On page 35 of the Future Gas Strategy consultation paper, a graph is published
combining the analysis of AEMO and the Australian Competition and Consumer
Commission (ACCC) which shows a shortfall of supply to demand beginning in 2027 and
widening significantly after that.
• The chart is reproduced below.

Source: Department of Industry Science and Resources Future Gas Strategy consultation paper, page 35,
AEMO, ACCC.

• It is notable that this chart projects a decline in gas demand over the next 10 years, but
at a much slower rate than the projected decline in supply.

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• Without the development of new gas resources eastern Australia, and particularly NSW,
faces the very real prospect of supply shortfalls with consequent losses of jobs in gas-
dependent industries, higher energy costs and disruptions to supply.

2. What role do you see gas-fired generators playing in supporting Australia’s 82% renewable energy targets and beyond?

• The Future Gas Strategy consultation paper highlights that Gas has a critical role to play
in Australia’s net-zero transformation. Gas provides a low emissions, abundant and
flexible energy source that is available today. Gas is uniquely able to provide energy at
scale to fill gaps between demand and energy supply from intermittent renewable
energy sources like wind and solar.
• The International Energy Agency19 this month released a report highlighting that new oil
and gas investments will still be needed for the world to hit net zero emissions goals, and
with the gas playing a critical role in ensuring global energy security.
• The Australian Energy Market Operator’s 2022 Integrated System Plan20 (ISP) highlights
the critical role that gas will play “as coal-fired generation retires” in providing electricity
supply in peak demand periods and in “firming” intermittent power supply from
renewables, particularly solar and wind. Gas will complement battery and pumped hydro
generation in what AEMO calls “long ‘dark and still’ periods.”

3. How will the expected trends in demand from gas-fired generators impact other gas users?

• The Australian Energy Market Operator’s 2022 Integrated System Plan says generation
from gas-fired peaking plants will increase from 7 GW in 2022 to 10 GW in 2050. This
compares with the current capacity of 11 GW from gas-fired and liquid-fuelled (mainly
diesel) generation.
• Sustained demand for gas for power generation could be greater if there is a shift from
coal to gas for baseload power, though the extent to which this occurs will be
determined by the pace at which large-scale renewable energy capacity comes on line.
• This demand for gas for electricity generation will compete with use of gas by
commercial, industrial and residential customers. In a flat future production scenario
with limited growth in supply, more gas for power generation will see other gas users pay
higher prices and perhaps face gas shortages.

4. What should government do to consider managing these impacts and to mitigate energy peaks caused by regional or seasonal variations?

• The most effective measures government can take to mitigate these impacts and smooth
energy peaks is to facilitate the continued development of new gas supply.

19
The Oil and Gas Industry in Net Zero Transitions – Analysis - IEA

20
2022-integrated-system-plan-isp.pdf (aemo.com.au)

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9. What role might carbon capture, utilisation and storage (CCUS) and negative emissions technologies (NETs) (for example direct air capture and CO2 removal) play in decarbonising industrial processes that are hard to abate in your business or industry?

• Refer answer to question 13 above.

19. What options should the Australian Government consider to ensure international investment in Australian LNG projects remains competitive?

• To remain competitive the Australian Government should consider:
o Certainty in approvals, project timelines and freedom from post-investment
intervention.
o On-going access to developable resource (i.e., continued ability to undertake
exploration and development activity).

Community

25. How can the Australian Government better communicate and provide more transparency to local communities regarding gas projects?

• Given the increasing public interest in all aspects of energy production and use, there is
also an increasing role for Government to explain its energy policies and regulatory
processes to the wider community.
• The independent offshore energy regulator NOPSEMA has noticeably increased its focus
on community engagement both from energy proponents and from the regulator itself.
• Given the role of the regulator is so important to maintaining public confidence in the
energy industry, this trend is to be encouraged.

26. What opportunities exist to improve engagement and consultation processes with industry?

• Advent Energy acknowledges that many in the community have questions about offshore gas
exploration and development, an industry unfamiliar to most in NSW. Advent Energy is
committed to responding to them in a forthright and truthful manner.
• It is important that public discussion is grounded in fact. False and exaggerated claims do
nothing to inform the sometimes difficult and often complex issues that policy makers must
consider.
• Much of the public and political discussion of PEP-11 assumes widespread and even
overwhelming opposition to gas exploration offshore NSW.
• That is inconsistent with our discussions with businesses and community members in the
Hunter region, and polling we conducted following this year’s NSW state election.
• The polling suggests that gas exploration offshore the Hunter region has far stronger support
than opponents of development have acknowledged, and that politicians may have realised.
• The polling, commissioned by Asset Energy, captured responses from 1,000 respondents
aged 18 and over in the Hunter region. The polling found a much higher level of concern over
the impacts of likely gas shortages in the region than concern about plans to extract gas
offshore.

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• Specifically, it found:
o 50% of respondents said cost of living was the biggest issue in this year’s NSW
election, while 12% listed “managing the economy” and 8% said environment and
climate change was the major issue. Less than 1% listed gas exploration as the most
significant issue.
o 61% of Hunter Region voters supported exploring, developing and using more of
Australia’s gas reserves, while only 10% opposed that activity.
o 37% of respondents said they supported gas exploration offshore the Hunter region.
41% neither supported or opposed the activity, and 22% opposed this local gas
exploration.
• The poll was conducted by data and insights firm Pureprofile in the week immediately after
the March 25 NSW State election. The survey size means it is accurate within a 3% margin.
• Advent has engaged over the last 12 months with the NSW community across five Federal
electorates in the Hunter Region via a targeted social media campaign and can demonstrate
approximately 250,000 unique interactions, the great majority of which are positive on the
need for drilling off the coast of NSW to confirm this much needed energy resource and are
highly critical of the energy cost impact of current policies.

Distributors and LNG import terminal project proponents

32. Could the construction of LNG import terminals contribute to improving energy security in
Australia?

• Gas import terminals have long been discussed as an alternate supply of gas to a tight
domestic markets, but no projects have proceeded amid an apparent reluctance of gas users
to commit to offtake arrangements.
• Last week the ABC reported that the proponent of a long-heralded gas import terminal near
Wollongong had been shelved21.
• Australian Energy Producers (formerly the Australian Petroleum Production & Exploration
Association) has long welcomed the prospect of gas imports as delivering “more supply from
more suppliers,” but also highlighted that in country with abundant undeveloped gas
resources, domestic production should invariably be more affordable to local gas users than
gas supply brought from overseas.
• Most expectations are that the internationally traded LNG price will hold well above the
Australian domestic gas price. There have only been occasional circumstances which have
seen the domestic gas price rise above traded LNG prices.
• At time of writing the current Japan LNG price is approximately A$18 per GJ22.

21
Andrew Forrest's Squadron Energy quietly pulls plans for Port Kembla gas-fired power station - ABC News

22
Japan Liquefied Natural Gas Import Price (ycharts.com)

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33. Under what conditions would LNG import terminals be commercially viable in Australia?

• Gas import terminals would only appear to be commercially viable if Australia failed to
develop its own resources and drove up local prices, or if global gas demand was to fall
significantly.
• There is no evidence that the latter is likely in coming decades.

Consumers (domestic)

39. What are the risks to Australia’s domestic gas security in the medium (to 2035) to long term (to 2050) for your industry and how can these be addressed?

• Risks to Australia’s domestic gas security in coming years would appear to be threefold:
o Failure to develop identified gas resources closest to key demand centres resulting
higher prices to transport gas and less secure supply.
o Overly rigid and unpredictable regulatory frameworks that impact investor
confidence in the industry.
o Political debate that suggests long-term policies toward the energy industry are not
settled and do not enjoy bipartisan support.

40. What do you see as the biggest risk to the ongoing affordability of Australia’s domestic gas supply? For example, what are risks to affordability in the wholesale or retail market?

• Refer answer to question 39.

42. What actions are available to lower gas costs, including substitution and new supply, to provide certainty to consumers? How would these actions further the Australian Government’s decarbonisation goals?

• The best way to provide certainty to consumers and to lower gas costs is to encourage new
supply.
• The Future Gas Strategy consultation paper highlights that gas has a critical role to play in
Australia’s net-zero transformation. Gas provides a low emissions, abundant and flexible
energy source that is available today. Gas is uniquely able to provide energy at scale to fill
gaps between demand and energy supply from intermittent renewable energy sources like
wind and solar.
• The International Energy Agency23 this month released a report highlighting that new oil and
gas investments will still be needed for the world to hit net zero emissions goals, and with
the gas playing a critical role in ensuring global energy security.

23
The Oil and Gas Industry in Net Zero Transitions – Analysis - IEA

13
44. Do you use any forecasts of gas supply to inform your outlook of the gas market? If so, what are they? You may also wish to consider whether these forecast scenarios consider the technical and commercial uncertainties associated with gas reserves and resources. Which scenarios do you consider best reflect the supply outlook?

• The importance of new gas projects and gas supply cannot be overstated.
• The analysis contained in the Australian Competition & Consumer Commission Gas inquiry
2017-2030 interim report (January 2023) (ACCC Report)24 makes clear that from 2026 there
will be a shortfall of supply in gas in the Australian east coast gas market even factoring in
the Commonwealth Government’s commitment to net-zero carbon emissions by 2050.
• As that report relevantly notes25:
o From 2026 onwards the east coast gas market is expected to experience a shortfall in
supply from [proved and probable (2P)] reserves unless additional supply comes
online. Under a Step Change scenario for gas demand [which models a steep decline
in gas demand], the shortfall may be deferred until 2027. However, in the long-term
there is not expected to be sufficient gas production from 2P reserves to meet
demand.…
o [G]as demand is expected to decline over the longer-term through a shift to greater
electrification and as energy policy shifts towards net-zero emissions targets.
However, natural gas will likely be part of the transition between coal power
generation and renewable energy sources, and there will be ongoing need for gas
from commercial and industrial users in particular.
o Without expansion in production, gas supply shortfalls are expected arising from
export and domestic demand even under a Step Change scenario in which there are
greater shifts to electrification, consistent with net-zero emissions targets.
o This would place continued upward pressure on prices in the gas market, as well as
pressure on the electricity market through the role that gas powered generation will
likely play in meeting peak electricity demand and maintaining the stability of the
east coast energy system.

24 Australian Competition & Consumer Commission Gas inquiry 2017-2030 interim report (January 2023), [5.3.3].

25
Australian Competition & Consumer Commission Gas inquiry 2017-2030 interim report (January 2023), [5.3.3].

14
Rystad Energy Gas arket Cube 2023

• The view that new natural gas production is urgently needed is backed by international
energy analysts, Rystad Energy.
• Energy News Bulletin reported on 5th October 2023:
o Independent energy research intelligence company Rystad Energy has warned that
the current existing gas fields will not meet the global gas demand as it is projected
to rise in the next decade despite a 12.5% surge in gas output by 2030 and rapid
growth in renewable energy.
o Rystad's vice president of exploration Aatisha Mahajan said gas was increasingly
considered a crucial stepping stone to a sustainable future. "With reduced emissions
and regional energy security goals aligned, gas is poised to play a pivotal role in the
global energy transition," Mahajan said.
o Rystad's analysis of global warming scenarios indicated that more gas exploration
and production was required to meet 1.9 or 2.5 degrees Celsius of warming.
o "Therefore, gas exploration and additional capital investment within prominent gas
basins or gas-rich countries are necessary," it said in the report.
• In another sign of a tightening international gas market, Energy New Bulletin reported late
last year that Japanese trade ministry officials and energy company executives said global
LNG supplies were sold out for years ahead26.
o Long-term LNG contracts that start before 2026 are sold out, according to a survey of
Japanese companies conducted by the trade ministry and released yesterday. These
types of contracts are essential for buyers, as they offer stable pricing and reliable
supply for many years, the report added.

26
Energy News Bulletin, 22 November 2022: Global LNG supplies are sold out for years, says top importer

15
o Countries around the world are scrambling to secure shipments of the super-cooled
fuel from major exporters like Qatar and the US. However, there's scant new supply
coming online before 2026, the year Qatar's Northfield East expansion becomes
operational.
o Europe, for its part, is racing to replace Russian pipeline gas with LNG, further
exacerbating the global shortage of fuel. The EU's largest economy, Germany, will
soon have as many as five floating regasification and storage units (FSRU) in place to
begin importing the fuel for both domestic usage and to act as an LNG hub for other
EU members.
o As such, importers will be forced to depend more on the volatile and expensive spot
market, which is currently trading nearly three times higher than long-term contracts
usually indexed to the price of Brent crude.
o Roughly 30% of all LNG deliveries were via the spot market last year, according to the
International Group of Liquefied Natural Gas Importers.
o Japanese ministry officials and energy company executives met on the same day to
discuss LNG procurement plans, according to the report. Japan is poised to be the
world's biggest LNG importer this year, after slipping to the second slot earlier to
China. The fuel is the nation's top choice for power generation.
o A lack of investment in LNG export projects means that supply will be very tight for
years, the trade ministry document said. If Russian pipeline gas to Europe is cut
completely, the world could see a shortage of 7.6 million tons of LNG in January
2025, equivalent to one month's worth of imports to Japan, according to the
document.
o Japan has been taking steps to ramp up energy security by enabling the government
to purchase LNG from the spot market in the event companies cannot.

Advent Energy would be available at any reasonable time to discuss this submission.

If you require further information, please contact me on

Yours sincerely,

16

APPENDIX A

Advent Energy Limited (ABN 39 109 955 400)
Unit 12, Level 1, 114 Cedric St,
Stirling, Perth, WA 6021 Australia

Mr Clayton Barr, MP
Chair
Legislative Assembly Committee on Environment and Planning
NSW Parliament House
6 Macquarie Street
Sydney NSW 2000

8th September 2023

Dear Chair,

Minerals Legislation (Offshore Drilling and Associated Infrastructure Prohibition) Bill 2023

Advent Energy welcomes the opportunity to submit a response to the Minerals Legislation
Amendment (Offshore Drilling and Associated Infrastructure Prohibition) Bill 2023.

Advent, through its wholly owned subsidiary Asset Energy, has an 85% interest in the PEP-11 exploration licence which lies in federal waters off the coast of New South Wales and is currently going through the process of re-applying to have the licence extended.

The terms of the licence allow for Advent to explore for natural gas, this includes activities such as geological, geochemical and geophysical studies and the drilling of exploration and appraisal wells.
All of those activities require specific environmental approvals from the independent regulator, the
National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

The current licence does not allow for production of any commercial gas resources that may be discovered, that is a separate process whereby the exploration licence is converted to a production licence.

Significant geoscience work has been carried out before and after Advent acquired its interest in the licence in 2004, including the drilling of the New Seaclem-1 well in 2010, with zero safety or environmental incidents.

It is the submission of Advent Energy that New South Wales needs the development of new natural gas resources to meet the ongoing needs of its homes and businesses, and that there is no environmental, safety or other reason to prevent exploration and production occurring in Federal waters offshore the state.

The urgent need for new sources of natural gas in New South Wales has been repeatedly stressed in a significant number of reports, some of which are detailed in this submission.
The Australian Energy Market Operator (AEMO) recently released its 2023 Electricity Statement of
Opportunities (ESOO) report, providing a 10-year reliability outlook that signals development needs for each state in the National Electricity Market (NEM). It is further evidence that urgent and ongoing investment is needed to maintain energy reliability, with AEMO warning of a “material risk” to
Australia’s power supplies because of future gas shortfalls and a lack of investment in gas generation.
It highlights “ongoing availability” of energy sources such as gas “will be critical to the reliability” of the NEM, along with over 1.5GW of new gas power generation capacity needed in New South Wales and Victoria by 2026/27 to meet current reliability standards.

Further key points from the 2023 GSOO are highlighted in Appendix A.

Another important document is “Running on Empty,” a 2019 report from the state’s leading business chamber, Business NSW, which provides the following critical observations:

• NSW imports 98 per cent of its gas requirements from other states
• A constrained national gas market will see further price rises for every household
and business in NSW.
• In NSW, an estimated 250,000 jobs rely on gas supply. Gas supplies around 1.3
million households and 33,000 businesses.
• NSW’s manufacturing sector, which is approximately 84% of the state’s Industrial gas
load, adds $33 billion in industry value.
The report found without addressing NSW’s looming gas shortfall these could be at risk, and:

• Inaction on gas and energy security are now holding the future of businesses in NSW
to ransom, threatening employment losses and reduced investment.
• As the southern (Victoria, Tasmania, NSW and South Australia) fields further decline
in the future and if no more southern resources are developed, pipeline constraints
(particularly in the pipelines from north) will impact [supply to NSW.]
As the Australian Petroleum Production & Exploration Association has highlighted:

• Gas meets almost 30 per cent of Australia’s energy needs.
• More than 5 million Australian households use gas directly for heating and cooking.
• Gas is a critical component of products we rely on every day, including ammonia (for
fertilisers) and the manufacture of bricks, glass, plastics and medical products.
• Gas is around 50 per cent cleaner than coal for generating electricity.
• Gas plays a key role in supporting the integration of intermittent renewable energy
sources such as wind and solar.

Prospective gas resources have been identified in PEP-11 of 5.7 TCF1 across multiple structures along the continental shelf. The prospective resource, if proven, has the possibility of supplying NSW with the bulk of its gas needs for 20 years.

It is Advent’s intention to test one of these structures, the Baleen prospect, by drilling the Seablue-1 well which would occur approximately one year after granting of the licence extension, subject to specific environmental approvals and offshore drilling rig availability.

1 Berge 2010, Independent Expert Report - Permo Triassic, as released by MEC Resources to the ASX 22nd December 2010
Advent Energy can play a significant and direct role in NSW’s energy transition and help to reduce energy costs.

Potential gas production offshore from Newcastle, and the potential to use that same area to permanently store captured carbon emissions, can both contribute to meeting the challenges of climate change and sustaining secure employment in the region.

Of course, we must demonstrate that these activities can be conducted safely and sustainably.

The good news is we know they can. The offshore oil and gas industry might be unfamiliar to many in
NSW, but around Australia it has a long and strong track record.

More than 3,000 wells have been drilled over the last 60 years, more than 1,000 of which are offshore Victoria – which also boasts some of the country’s most productive commercial fisheries, whale nurseries, and a spectacular coast that attracts millions of visitors every year.

Closer to home, people from the Hunter region might remember the gas well which was safely drilled off Nelson Bay in 2010, which caused no negative impacts to the marine environment.

As stated above, successful gas exploration and production could provide gas to supply NSW homes and businesses for more than 20 years. That would support local jobs and boost local industry.
Business NSW estimates 250,000 jobs in NSW rely upon gas as a feedstock and energy source – that includes workers at Orica, BlueScope Steel, Qenos, and other companies.

Further, assessing the viability of permanently storing CO2 in rock structures deep below the seabed offshore Newcastle could become an important part of the Australian Government’s technology-led approach to emissions reduction. The area could be an ideal location for carbon capture and storage, about 100 km from some of Australia’s largest CO2 emitters.

In short, replacing coal with gas-fired power generation and advancing CCS are obvious steps to help
Australia meet the challenges of climate change.

We believe there is no reason offshore gas exploration and production should impact the NSW coast in any negative way.

Advent Energy does not propose any offshore activity closer than 15km to the coast. That is well beyond the horizon. And after the 60-90 day drilling period, the drill rig and any other infrastructure are removed and there is nothing visible from the coast or from the air.

It is also often said in the public debate that exploration and development within PEP-11 could see activity offshore Sydney’s beaches. While the permit’s current boundaries do reach as far south as
30km offshore from Manly, Advent Energy has made clear that the company has no intention of conducting activity in the southern portion of the permit area. The company has previously indicated its willingness to relinquish areas below a line extending east from the coast south of Terrigal to focus its activity offshore the Lower Hunter, which is the area we believe is most prospective for future gas development.

A map of the current permit boundaries is in Appendix B.

It is also important to note that Advent Energy is exploring for natural gas, not oil. All the scientific evidence collected over years show that the area where we are planning to explore is a gas prospect.
Claims that oil spills could result from the proposed activity are not credible.
he late Per ian coal
easures could ro ide a
iable ature gas
condensate source along
the length of the Offshore
li ith si le igration
ath a s u di to the crest
of the u li
This model results in all of
the Late Permian Coal
Measures being in the gas
window

Figure-Offshore Sydney
Basin Inferred Maturity
and Migration Pathways

ource E olution and drocarbon
Pros ecti it of the Offshore dne Basin
Bradle Ne Petroleu osiu
3

Figure 1: 1993 map extract highlighting gas prone area

Advent Energy acknowledges that many in the community have questions about an industry unfamiliar to most in NSW. Advent Energy is committed to responding to them in a forthright and truthful manner.

It is expected this Inquiry will also address those concerns in an honest, science-based manner that reflects the reality of the offshore petroleum industry around Australia and Parliamentarians’ obligation to truly serve the interests of the wide community they represent.

It is important that public discussion is grounded in fact. False and exaggerated claims do nothing to inform the sometimes difficult and often complex issues that policy makers must consider.

Much of the public and political discussion of PEP-11 assumes widespread and even overwhelming opposition to gas exploration offshore NSW.

That is inconsistent with our discussions with businesses and community members in the Hunter region, and polling we conducted following this year’s NSW state election.

The polling suggests that gas exploration offshore the Hunter region has far stronger support than opponents of development have acknowledged, and that politicians may have realised.

The polling, commissioned by Asset Energy, captured responses from 1,000 respondents aged 18 and over in the Hunter region. The polling found a much higher level of concern over the impacts of likely gas shortages in the region than concern about plans to extract gas offshore.
Specifically, it found:

• 50% of respondents said cost of living was the biggest issue in this year’s NSW election, while
12% listed “managing the economy” and 8% said environment and climate change was the major issue. Less than 1% listed gas exploration as the most significant issue.

• 61% of Hunter Region voters supported exploring, developing and using more of Australia’s gas reserves, while only 10% opposed that activity.

• 37% of respondents said they supported gas exploration offshore the Hunter region. 41% neither supported or opposed the activity, and 22% opposed this local gas exploration.

The poll was conducted by data and insights firm Pureprofile in the week immediately after the
March 25 NSW State election. The survey size means it is accurate within a 3% margin.

Detail of the poll questions and responses are attached as Appendix C.

Advent has engaged over the last 12 months with the NSW community across five Federal electorates in the Hunter Region via a targeted social media campaign and can demonstrate approximately 250,000 unique interactions, the great majority of which are positive on the need for drilling off the coast of NSW to confirm this much needed energy resource, and are highly critical of the energy cost impact of current policies.

er s of Reference

Advent Energy makes the following comments in respect of the Inquiry’s terms of reference, noting the proposed amendment to legislation intends to prohibit mining and development of offshore oil, gas, and mineral resources in NSW.

These comments apply specifically to the intent to prohibit the development of offshore gas resources.

(a) An constitutional issues or unintended consequences raised b the bill and hether an a end ents a address those;

As the PEP-11 licence lies in Commonwealth waters, exploration and production licenses are managed by a Joint Authority, comprising the State and Federal Resource Ministers, with the Federal
Minister having the casting vote with respect to decisions relating to the licences.

A declared intention of some supporters of the Bill is that in the event the Federal Government approving the extension of the PEP-11 permit, and NOPSEMA granting necessary environmental approvals, that the Bill could be used to prevent the building of infrastructure to bring any subsequent gas production to shore.

That would seem an extraordinarily short-sighted and capricious act, to prevent a product that had been safely produced and was much in demand from reaching the homes and businesses that demanded it. As this Term of Reference implies, this may be in breach of provisions in the Australian
Constitution.

Under the current legislative framework in NSW, Advent would have options to bring the gas to market, the most direct route would be via pipeline to shore, a relatively short distance of 27km, to tie into the Jemena gas trunk at the Munmorah gas-fired power plant.
Figure 2: Likely connection of offshore gas production to existing onshore infrastructure.

Another unintended consequence of this bill is that it could see higher energy prices in New South
Wales and disruption to gas supply that could threaten tens of thousands of local jobs.

The situation with domestic gas supply on the east coast has been identified as critical for several years. Population growth, establishment and growth of new and existing industries, closure of legacy power stations, mainly coal powered, and a lack of onshore exploration across the two most populous states have led to a looming shortage of domestic gas supply to the eastern seaboard.

The Importance of New Gas Projects and Gas Supply
1. The analysis contained in the Australian Competition & Consumer Commission Gas inquiry
2017-2030 interim report (January 2023) (ACCC Re ort) is particularly important. That
analysis makes clear that from 2026 there will be a shortfall of supply in gas in the
Australian east coast gas market. As that report relevantly notes:2
From 2026 onwards the east coast gas market is expected to experience a shortfall
in supply from [proved and probable (2P)] reserves unless additional supply comes
online. Under a Step Change scenario for gas demand [which models a steep decline
in gas demand], the shortfall may be deferred until 2027. However, in the long-term
there is not expected to be sufficient gas production from 2P reserves to meet
demand.…

2
Australian Competition & Consumer Commission Gas inquiry 2017-2030 interim report (January 2023),
[5.3.3].
[G]as demand is expected to decline over the longer-term through a shift to greater
electrification and as energy policy shifts towards net-zero emissions targets.
However, natural gas will likely be part of the transition between coal power
generation and renewable energy sources, and there will be ongoing need for gas
from commercial and industrial users in particular.
Without expansion in production, gas supply shortfalls are expected arising from
export and domestic demand even under a Step Change scenario in which there are
greater shifts to electrification, consistent with net-zero emissions targets.
This would place continued upward pressure on prices in the gas market, as well as
pressure on the electricity market through the role that gas powered generation will
likely play in meeting peak electricity demand and maintaining the stability of the
east coast energy system.
Additional gas supply will be needed to avoid future shortfalls.
2. The analysis of the ACCC is reflected by the recent representative public comments of
senior Commonwealth Government Ministers.
(a) The Prime Minister the Hon Anthony Albanese MP said that “gas will play a
role in renewables”3 when defending the role that gas will play in the
transition to clean energy.

(b) The Hon Madeleine King MP correctly noted that:4

In the short term, medium term and long term we will need gas. You
need gas to process critical minerals and rare earths which are
essential for clean energy technology.
(c) The Hon Chris Bowen MP said that:5

Gas is a flexible fuel necessary for peaking and firming as we
undertake this transformation [to the government’s renewables
target].
(d) The Hon Dr Jim Chalmers MP noted that the gas industry is a “really
important”6 part of the nation’s economy, and that the Commonwealth
Government is working on increasing gas supply7 to combat rising energy
prices.

3. The views of the ACCC are reflected within industry. Dr Kerry Schott (the former head of
the Energy Security Board) recently observed that the pathway to net zero emissions is

3
AFR Business Summit (7 March 2023) accessible at: https://www.pm.gov.au/media/afr-business-summit-0
4
Interview with Tom Connell, Sky News (15 February 2023) accessible at: https://www.minister.industry.gov.au/ministers/king/transcripts/interview-tom-connell-sky-news
5
Address to the Sydney Institute (13 March 2023) accessible at: https://minister.dcceew.gov.au/bowen/speeches/address-sydney-institute
6
Press Conference, Blue Room, Canberra (25 January 2023) accessible at: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/press-conference-blue-room- canberra-1
7
For example, Interview with Neil Mitchell, 3AW (26 October 2022) accessible at https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-neil-mitchell-3aw-0;
Interview with David Speers, Insiders ABC (30 October 2022) accessible at: https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/transcripts/interview-david-speers-insiders-abc-
0
not realistic without further gas supply.8 A similar observation has been attributed to Mr
Adrian Dwyer (CEO of Infrastructure Partnerships Australia).9 The Australian Petroleum
Production and Exploration Association has also observed the need for Australia to
increase its domestic gas supply in light of the shortfall projections noted above.10
4. Closely related to the need for Australia to have new gas supply is the fact that a lack of
gas supply is a key driver of inflation. As Dr Phillip Lowe, the former Governor of the
Reserve Bank of Australia, said in a Senate Estimates Hearing:11
One way of tackling inflation induced by supply-side shocks is to address the supply
side. At the moment there are two areas I think we could be focusing on. It's the
supply of gas and electricity in the domestic market—what we can constructively do
to increase the supply. I don't want to get drawn into what the right measures are,
but just at the analytical level, increased supply of gas and electricity in the domestic
market would be helpful.

It is also worth noting that in submissions to the Federal Government’s review of the Australian
Domestic Gas Supply Mechanism12 last year several significant NSW gas users and other business groups made comment on the need for the development of new natural gas resources.

Some examples of key points in submissions included:

Caus ag International

• States should not place restrictions on development of new gas fields once all the
environmental conditions have been met. Australia has some of the world’s strictest
environmental regulations and the gas producers should not be restricted once they have
satisfied these regulations.
• The states need to let their environmental regulators process applications from gas
producers on merit, without influence or interference from political considerations. The
Commonwealth should not bar companies like Asset Energy from utilizing their exploration
permits for off-shore drilling. Off-shore drilling is a common practice internationally to access
gas without damaging the environment.

C R Ltd

• Australia’s domestic gas supply-demand balance has been forecast to tighten for a number of
years, and a coordinated federal and state energy transition is required that will ensure
adequate levels of domestic gas supply are brought to market at sustainable prices.
• An energy transition plan must be put in place that ensures enough gas is brought to market
at the right time.

8
See the commentary in “States hits for ‘demonising’ gas” Australian Financial Review (28 February 2023).
9
See the commentary in “States hits for ‘demonising’ gas” Australian Financial Review (28 February 2023).
10
APPEA Media Release, “Government Strategy for New Games Supply Needed After More Shortfall Warnings”
(16 March 2023).
11
Commonwealth of Australia, Official Committee Hansard (Senate): Economics Legislation Committee
(Monday, 28 November 2022) p4.
12
https://consult.industry.gov.au/adgsm-extension/submit-your-feedback/list
Che istr Australia

• The $38 billion chemistry industry plays a vital role in the Australian economy, underpinning
more than 212,000 jobs and supplying products, technologies and innovations to 108 of
Australia’s 114 industry sectors.
• The chemistry sector represents approximately 10% of east coast domestic gas demand and
a very small percentage of overall east coast production. Our members use gas (methane
and ethane) as a non-substitutable feedstock for manufacturing a broad range of key
products used throughout the economy for both domestic and export markets.

Ce ent Industr Federation

• As such, ensuring the adequate supply of affordable energy in all forms, including natural
gas, must be a key priority for all Australian governments to ensure a strong, growing
manufacturing industry and economy in general.

Australian Alu iniu Council

• The Australian alumina and aluminium industries are highly dependent on gas for their
operations and viability; directly using more than 1661 PJ of gas per annum as well as
indirect consumption via the electricity market.
• Energy typically accounts for 30-40% of the industries’ cost base, and therefore it is a key
determinant of their international competitiveness.

Australian Cha ber of Co erce

• Even if they can afford to pay the elevated prices, many (Commercial and Industrial) gas
users are finding it very difficult to source gas on the spot market. Many businesses relying
directly or indirectly on gas as feedstock, heat or power generation, face closure as they
cannot continue to operate at current gas prices.
• Even before the current gas crisis, C&I gas users nearing the end of their current gas supply
contract were finding it extremely difficult to negotiate new long-term contracts at
affordable prices.
• By way of example, Incitec Pivot recently announced it will cease manufacturing of AdBlue at
its Brisbane-based Gibson Island plant at the end of 2022, as it had been unable to secure a
long-term contract for affordable gas supply from 2023 onwards. Incitec Pivot is the only
Australian producer of AdBlue, which is an important fuel additive to reduce greenhouse gas
emissions from diesel engines.
• State regulation — such as the Victorian Government’s moratorium on unconventional (coal-
seam) onshore gas exploration and all forms of off-shore unconventional (coal seam gas)
exploration, and the NSW Government’s ‘go-slow’ on environmental assessment for
unconventional gas field development — is having a substantial impact on gas exploration
and investment decisions.
• Similarly, in NSW which relies on the importation of 98 per cent of its gas requirements from
other states, the environmental approval process for the Narrabri gas field development has
been extremely slow.
• Federal and State Governments must focus their attention on lifting restrictions on gas
exploration and extraction and facilitating faster approvals for new gas projects to increase
the volume of gas available in the network.
Business N W

• Many manufacturers are dependent on gas for processes which cannot be fuel-switched to
use electricity. As the Australian Chamber of Commerce and Industry (ACCI) state in their
recent submission on the Australian Domestic Gas Security Mechanism Extension: “These
prices are unsustainable. Already we are seeing [Commercial and Industrial] gas users under
extreme pressure and indicating that if the price pressures cannot be relieved shortly, they
will be forced to close and/or leave Australian shores.”
• Longer term, other gas development proposals in NSW should be given serious consideration
as, in the aftermath of the Ukraine invasion, market conditions have altered considerably
since the first time it was reviewed. Both Commonwealth and NSW Governments will need
to be more open to new gas field developments to bridge the gap to hydrogen or other
options becoming viable.

Energ sers Association of Australia

• The cost of producing everything from pasta sauce and other processed foods through to
beer and toilet paper has gone up due to unsustainably high gas prices, feeding the surging
cost of living pressure being felt by households and business alike.
• Australian manufacturers, food processors and heavy industry such as steel and cement have
also invested tens of billions of dollars over the past decades as they built significant
productive capacity and underwrote 850,000 jobs.
• We can assure you that sufficient supply of gas at $15Gj+ is largely irrelevant for a vast
majority of domestic C&I gas users. It is our firm view that stronger measures are required to
ensure gas suppliers deliver on both supply and price.
• There is strong support for removing gas moratoria: Replacing the blunt instruments of
moratoria with transparent technical assessment, robust planning/monitoring and a just
compensation framework for landowners should be a priority.

Australian Workers nion

• In early August, the ACCC released its alarming assessment of the domestic gas market. It
predicts a 10% shortfall of over 50,000 terajoules.
• The current crisis was not foreseen until February this year as Russia invaded Ukraine.
• Industrial users for heat or feedstock have no relief but stand to lose just as much if the
market collapses. Unlike electricity users, they have no reasonable alternative to gas use.
• Actions to avoid the next gas crisis:
o In the medium-term (over the next 3 to 5 years), Australia will also need a sensible
national gas supply policy, making genuine efforts to bring more gas online in
consultation with state and territory.

Committee members are urged to consider the serious message being sent to policymakers by these organisations, and their warnings of the consequences of playing politics with gas supply.

(b) Whether there are other a s to achie e the intended outco es of the ro osed bill including through the Ne outh Wales o ern ent offshore ex loration and ining olic ;

Presumably the overriding intention of this Bill is to protect the NSW coast and marine environment.

One clear way to do this is to permit offshore gas exploration and development but only under the most robust regulatory environment and the highest operating standards.
Advent Energy is committed to complying with such regulations and meeting world-best operating standards. It is the Australian industry’s delivery against these objectives that has enabled the economic and energy benefits of offshore gas exploration and production while protecting the marine and coastal environments wherever it has operated around the country.

The fact is that resources with a high energy density such as gas require a much lower production footprint that those with lower energy density, and therefore have much less impact on the environment, both onshore and marine.

Figure 3: International Energy Agency analysis of metals and minerals used in energy production.

(c) Enforce ent and co liance issues raised b the bill;

In seeking to prohibit mining and development of offshore oil, gas, and mineral resources in NSW, the obvious enforcement challenge raised by the Bill is that the Government of NSW has no jurisdictional authority beyond State waters, which typically extend only 3 nautical miles from the coast.

In Advent’s view there may be enforcement and compliance issues raised by the Bill, should it become law and apply to State waters only. If the amendment was passed, the development of a gas resource could still commence, and the gas could be processed, stored and off taken at the location, some 27km off the coast of NSW with no connection to NSW.

This would be a suboptimal outcome with little rational justification, but compliance would be possible albeit without new gas supply likely being available to NSW homes and businesses.

(d) En iron ental i acts of offshore drilling

There are currently in the order of 500 offshore drilling rigs operating around the world in water depths from tens of metres to several kilometres, and approximately 9,000 offshore production facilities producing oil and gas. The vast majority of these operations proceed without incident, safely and with minimal impact to the environment.

This is especially the case in jurisdictions such as Australia, New Zealand, Canada, the USA and countries that border the North Sea, where the regulatory process is highly rigorous.
The Australian offshore safety and environment regulator NOPSEMA is rightly regarded as one of the most rigorous of the regulatory bodies across these jurisdictions.

The Offshore Sydney Basin is a proven gas basin. At the lighter end of the spectrum, condensates and gas pose the least threat to the local environment, dispersing rapidly under marine conditions.

Through geological studies and direct sampling of the gas that continuously percolates up to the seabed off the NSW coast from the underlying structures, Advent has established that the hydrocarbon type in PEP-11 is predominantly methane and ethane, with the possibility of a small amount of other light condensates.

As is mandated by NOPSEMA, any Environmental Plan submitted in preparation for drilling on PEP-11 would require robust modelling of any potential hydrogen release. Preliminary studies show that, no hydrocarbons would reach the NSW coast in the extremely unlikely event of loss of control of the well.

It can be stated with confidence that the risk of spillage and contamination of NSW beaches by marine grade fuel from the many freight vessels that visit Newcastle and other ports along the NSW coast is considerably higher than from drilling for gas some 25km from the coast.

As in other states and territories, there is no reason NSW cannot have a safe, sustainable and successful offshore gas industry.

(e) An other related atter

Advent believes NSW risks exacerbating an already serious energy supply situation by passing the proposed legislation, and while Advent would have a viable alternative to bring gas to market which would completely avoid NSW, we would caution against such a move.

From Advent’s recent informal contacts with several industrial users of gas across NSW, it is evident that due to current high prices and the distinct possibility of curtailment of supply, some of these companies are already making plans to relocate their manufacturing plants overseas where there is less risk of surety of supply of the vital raw material that is gas. The proposed amendment may introduce further sovereign risk through breaking of LNG export contracts, in the event the
Australian Government was forced to respond to gas shortages by intervention in this market.

Advent Energy welcomes the recent announcement of declared wind zones off the Hunter coast and elsewhere and has been in contact with several of the organisations who are bidding to provide wind power off the coast of NSW. As in the North Sea, the Gulf of Mexico and other areas, the goal of our industries is to collaborate, sharing our knowledge of the areas and looking for synergies that may exist, including taking energy to shore.

Our media release on the offshore wind zone announcement is attached as Appendix D. Our submission to the Federal Government consultation process can also be accessed here.
u ar

To conclude this submission, we would urge committee members to put fact, science and the established track record of the Australian offshore gas industry ahead of false, exaggerated and ideological claims of many industry opponents.

In summary and in simple terms, Advent seeks to:

• Provide gas to NSW for 20 years: It is estimated there is enough gas off the coast of the
Hunter (5.7 tcf) to provide clean energy to NSW people and businesses for 20+ years.
• Support jobs and local industry: Business NSW estimates 250,000 jobs in NSW rely upon gas
as a feedstock and energy source. Gas supports thousands of jobs at BlueScope Steel,
Causmag, Orica, and other companies. The presence of ethane could also secure much-
needed supplies to the Qenos plastics plant in Port Botany.
• Explore Carbon Capture and Storage potential: The drilling will also be used to explore CCS
potential. This could be an ideal location for CCS, about 100 km from some of Australia’s
largest CO2 emitters.

Advent Energy is not seeking to:

• Explore offshore Sydney: The gas target is more than 100km from Sydney. The size and shape
of the permit, which was originally granted in 1999, does not reflect the area of proposed
activity. Advent has indicated its willingness to relinquish the southern portion of the permit
most directly northeast from Sydney’s beaches.
• Explore close to any coast: At sea level, the horizon is about 5km from the coast. Asset would
not contemplate any future offshore activity closer than 15km to the coast.
• Drill for oil: Asset is exploring for natural gas, not oil. Seafloor geochemical sampling has
shown the presence of gas, and not oil. This is supported by repeated independent and
government geological reports.

There is no sound reason to prevent our proposed activity from proceeding.

The PEP-11 joint venture shareholders, compromising Advent Energy investees BPH Energy Ltd and
MEC Resources along with Bounty Energy which holds 15% of the permit, have over 4,000 shareholders resident in NSW, and over 14,000 shareholders in total, who would be adversely affected by the passage of this amendment.

Advent Energy would be available at any reasonable time to discuss this submission with the
Committee.

If you require further information, please contact me on 08 9328 8711 or at david@adventenergy.com.au

Yours sincerely,

David Breeze
Executive Director
A endix B

Ke oints fro AEMO’s 2023 as tate ent of O ortunities ( OO)

The Australian Energy Market Operator (AEMO) 2023 Gas Statement of Opportunities (GSOO) forecasts the adequacy of gas supplies, based on information from gas industry participants, to meet consumers’ changing gas needs from now until 2042 in Australian jurisdictions other than Western
Australia.

• Despite increased production commitments from the gas industry since the 2022 GSOO, gas
supply in southern Australia is declining faster than projected demand. As Australia
transforms to meet a net zero emissions future, gas will continue to complement zero
emissions and renewable forms of energy, and to provide a reliable and dispatchable form of
electricity generation, and may provide potential pathways to incorporate hydrogen and
other ‘green’ gases within Australia’s energy landscape.
• Extreme weather conditions across southern regions that drive high coincident peak demand
for gas consumption may lead to gas shortfalls, particularly if combined with high gas
generation (if alternative electricity generation resources are unavailable).
• Noting the risks above, annual physical gas supply from existing, committed and anticipated
production is forecast to be adequate before 2027. Investments are needed in the near term
to ensure operational solutions from 2027, despite falling gas consumption, noting that:
o From 2026, without additional commitments to expand domestic supply, or
alternative developments such as hydrogen or biomethane that may offset natural
gas demand, gas contracted for export by Queensland LNG producers may instead
need to be used to maintain domestic gas adequacy.
o Investment uncertainty exists regarding the development of LNG import terminals,
including the Port Kembla Energy Terminal (PKET) project. Based on information
provided by the project proponent, this GSOO no longer considers Port Kembla
Energy Terminal (PKET) as an anticipated project
• All future scenarios, however, forecast the long-term need for additional supply.

as for electricit generation

• As AEMO’s 2022 ISP11 reported, electricity from gas generation is expected to play an
important, continued role in the National Electricity Market (NEM).
• In the medium and longer term, as much of the coal-fired generation fleet retires, gas
consumption for electricity generation is forecast to rise. In the long term, gas generation is
forecast to continue to provide firming of electricity supply in a system with a high reliance
on variable renewable energy (VRE) such as wind and solar, complementing electricity
storage systems such as battery storages and pumped hydro.
• With the withdrawal of coal-fired generation, gas is forecast to take over some of coal’s role
as a seasonal energy reserve for the electricity system, particularly during times when
weather-dependent VRE is less available.

he gas su l adequac challenge fro 2023 that AEMO re orted in the 2022 OO re ains dri en b :

• The continued decline of traditional supply from the Gippsland region
• Limitations on the Moomba to Sydney Pipeline (MSP) and Southwest Queensland Pipeline
Capacity limits may still inhibit even greater southbound support on peak demand days, even
after the new Stage 2 of the East Coast Grid expansion completes from winter 2024
(expanding capacity by 90 TJ/d).
• Changing production and flow dynamics which mean that all southern regions (New South
Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania) share shortfall
risks, with South Australia now forecast to be within the constrained supply region.

Ex anded southern su l or increased trans ortation ca acit to access northern su l is needed to a oid do estic su l ga s

• Although AEMO is forecasting declining gas consumption, supply is declining faster than
forecast demand, and annual domestic supply gaps are forecast from 2027. Compared to the
2022 GSOO Step Change scenario, these annual supply gaps are forecast six years earlier.

In the longer term, new sources of supply will be needed even though annual domestic gas consumption is forecast to decline:
• Annual supply gaps are forecast as early as 2027
• Very little anticipated production is forecast to come online in southern regions in the next
five years
• Existing and committed production is projected to decline significantly over the forecast
horizon. Much of the short-term decline in southern production is occurring in the Gippsland
Basin. The gas system relies heavily on supply from Gippsland to meet peak demand during
winter.

as su l adequac assess ent

Based on the demand and supply forecasts ... this section provides a gas supply adequacy assessment for all Australian jurisdictions other than Western Australia. Key insights:

• There is a risk of peak day shortfalls in most scenarios across southern regions from 2023 if
coincident, extreme conditions in southern regions coincide with a high need for electricity
from gas generation.
• Shortfall risks could be avoided if the demand for electricity from gas generation was
reduced at times of peak gas demand.
• During these conditions, pipeline capacity constraints on SWQP and MSP limit more supply
from being provided by northern producers, even after committed upgrades are
commissioned.

Do estic su l ga s are at risk of e erging:

From 2026, without anticipated supplies being developed, Queensland LNG exporters must divert gas contracted for export to the domestic market to maintain domestic adequacy.

From 2027, even with the development of anticipated supplies, and with Queensland LNG exporters diverting the maximum amount of gas possible (limited by pipeline capacity) to southern customers, supply gaps affecting southern regions are forecast to emerge.

Overall, to meet forecast supply gaps ... greater resource development is needed to offset declining production, particularly in southern states ...
• Peak day shortfalls are forecast under extreme peak days in every year from 2023 to 2026
where large demand for gas generation coincides with significant residential, commercial and
industrial consumption (such as in reference year 2019).

LNG volumes contracted for export may need to be supplied to domestic customers from 2026 to maintain domestic supply adequacy without expanded domestic supply.

North Queensland su l adequac is at risk

• There is limited gas supply to meet forecast consumption from gas generation across the
entire horizon. Alternative North Queensland generation sources exist, and the Queensland
Energy and Jobs Plan89 identifies further regional development opportunities.
• Committed supply only will be insufficient to meet demand from residential, industrial, and
commercial customers on some days in 2024, and more frequently from 2025.

Various circu stances ould exacerbate risks to su l adequac

• Infrastructure delay
• Unavailability of the Newcastle Gas Storage Facility (NGSF) – the availability outlook for NGSF
is uncertain.
• Increased gas generation consumption – gas generation is a key contributor to near-term
shortfall risks... This GSOO explored two sensitivities that result in increased gas generation...
delayed commissioning of new renewable generation (VRE Delay) and extended drought
conditions akin to the water inflows from the 2006-07 millennial drought (Dry Year).

Longer-ter su l adequac

• Although most scenarios forecast declining demand for gas as consumers seek alternative
energy supplies to reduce emissions (via electrification, or from alternative gases such as
hydrogen or biomethane), supply is projected to decline faster than forecast demand.
Pipeline capacity for southern regions to access northern supply is forecast to become
constrained and annual southern domestic supply gaps are forecast from 2027.

Northern erritor gas adequac

• AEMO has collected production data for the Northern Territory voluntarily for the 2023
GSOO and produced approximate demand forecasts101. The Northern Territory is connected
to the east coast network via the NGP... The NGP is unidirectional and supports flow from the
Northern Territory to Queensland when there is a production excess, but does not support
flow from Queensland to the Northern Territory.
• As flow from Queensland is unable to support Darwin demand in the event of unplanned
outages, Power and Water Corporation (PWC, which manages large wholesale gas supply
and transportation) may purchase gas from the LNG export facilities in Darwin under
emergency circumstances102. This arrangement is useful to mitigate shortfall risks, but is not
viable to respond to annual supply gaps. PWC is reported to have used this mechanism in
2022 to respond to supply issues from the Yelcherr gas plant.
• ENI, operator of the Blacktip field which supplies the Yelcherr gas plant, plans to drill
development wells in the Blacktip field to return production capacity to normal rates in early
2023. If this is unsuccessful, less supply than forecast will be available to flow along the NGP
to the east coast, and emergency supply from the LNG export facilities may be required to
meet Northern Territory demand at peak times.
• Annual supply gaps are forecast to emerge in the Northern Territory from 2032 with
committed supply, and from 2033 with committed, anticipated and uncertain supply.
Mitigating these annual shortfall risks would require:
o Additional supply developed in the Northern Territory, and/or
o Pipeline transportation capacity developed from the east coast to the NT
A endix B

Current boundaries of Petroleu Ex loration Per it
A endix C

MEDIA RELEA E 5 A ril 2023

unter oll sho s strong su ort for gas de elo ent
New opinion polling shows that public sentiment towards gas exploration offshore the Hunter Region of New
South Wales has far stronger support than activists have acknowledged, and politicians may have realised.

The polling, commissioned by Asset Energy, is based on results from 1,000 respondents aged 18 and over in the
Hunter Region.

The polling found a much higher level of concern over the impacts of likely gas shortages in the region than concern about plans to extract gas offshore. Specifically, it found:

• 50% of respondents said cost of living was the biggest issue in last week’s NSW election, while 12% listed
“managing the economy” and 8% said environment and climate change was the major issue. Less than
1% listed gas exploration as the most significant issue.

• 61% of Hunter Region voters supported exploring, developing and using more of Australia’s gas
reserves, while only 10% opposed that activity.

• 37% of respondents said they supported gas exploration offshore the Hunter region. 41% neither
supported or opposed the activity, and 22% opposed this local gas exploration.

The poll was conducted by data and insights firm Pureprofile in the week immediately after the March 25 NSW
State election. The survey size means it is accurate within a 3% margin.

Asset Energy’s plans to explore for gas 30km off the coast of Newcastle were being considered in an independent assessment process up until December 2021 when former Prime Minister Scott Morrison announced he would not allow Petroleum Exploration Permit (PEP) 11 to be extended.

That decision was voided in February this year after Asset challenged its validity in the Federal Court.

Asset Energy executive director David Breeze called on the NSW and Federal governments to urgently reconsider their position on gas exploration offshore Newcastle as part of the solution to the east coast energy crisis.

“There is evidently much stronger support for gas resource development offshore NSW than the sometimes- noisy public debate would suggest,” Mr Breeze said. “What this research shows is that the people are with the science. This is a safe, highly regulated industry, which can support jobs and drive down energy costs, and do so without environmental impacts.”

Asset has long argued the case for local gas development in NSW, but in light of significant changes in the international energy market following Russia’s invasion of Ukraine and the prospect of sustained higher energy prices and gas shortages in Australia, the company is urging governments to reconsider their position and allow limited, safe, sustainable and robustly regulated exploration activity.

Mr Breeze said Asset’s project could be a major part of any solution to NSW’s gas shortages and high energy prices.
“Provided that the gas prospects across PEP11 are proven to be of commercial value, our project has the potential to supply 20 years’ worth of gas for NSW1. We have committed to inject all of our produced gas into the domestic market – and more supply will mean lower prices,” Mr Breeze said.

“Natural gas will play a critical role in supporting the energy transition, while also underpinning the state’s manufacturing industries and other commercial activity. Business NSW estimates 250,000 jobs in NSW rely upon gas as a feedstock and energy source.”

“We acknowledge the widespread discussion around the potential impacts of gas exploration and future production, including in PEP-11, but all too often that discussion is distorted by false and exaggerated claims and ignores the long track record of safe and sustainable operations in Australia’s offshore petroleum industry and the ongoing need for gas to meet power generation, industry, and domestic demand.”

The key questions in the poll were:

What as the ost significant issue that deter ined our ote in last eek’s N W election?

• Cost of living and/or interest rates - 49.8%
• Managing the economy - 12.5%
• Health and aged care - 11.2%
• The environment and climate change - 8.5%
• Energy reliability and affordability - 4.5%
• Roads and transport - 2.4%
• Crime and social order - 1.5%
• Defence and national security - 1.5%
• Offshore gas exploration - 0.5%
• Other issues - 7.6%

o concerned are ou about the i act of likel gas shortages on our household budget and the broader
N W econo ?

• Extremely concerned - 14.6%
• Highly concerned - 29.6%
• Slightly concerned - 21.7%
• Unaware - 21.9%
• Not at all concerned - 12.2%

Do ou su ort Australia ex loring de elo ing and using ore of its o n gas reser es?

• Strongly support - 23.6%
• Support - 37.7%
• Neither support nor oppose - 28.9%
• Oppose - 6.5%
• Strongly oppose - 3.4%

Do ou su ort or o ose gas ex loration offshore the unter region?

• Strongly support - 10.0%
• Support - 27.3%
• Neither support nor oppose - 40.9%
• Oppose - 14.1%
• Strongly oppose - 7.7%

1
In accordance with regulatory requirements, this is not a production forecast or a forecast of future performance of the
Company. This statement is an aspirational statement and is not referring to the Company’s advanced exploration targets based on existing exploration results.
A endix D

MEDIA RELEA E 7 Jul 2023

unter’s otential to be ‘offshore energ hub’ for N W
The Hunter has the potential to be an offshore energy hub for NSW following the declaration of an offshore wind energy zone that complements the existing PEP-11 offshore gas exploration permit.

The government has declared a 1,854 square km area extending offshore from Norah Head to Port Stephens as suitable for offshore wind development.

David Breeze, CEO of Asset Energy which holds the PEP-11 gas exploration permit, said the area offshore the
Hunter had the potential to be an outstanding example of gas and renewables working together to provide cleaner energy for the whole state.

The PEP-11 permit partly overlaps with the declared offshore wind zone, but Asset Energy’s proposed drilling location lies outside the wind zone. Around the world, including in the North Sea and the Gulf of Mexico, offshore wind projects are located or planned next to existing oil and gas production areas.

“We welcome this declaration because it reinforces our belief that decarbonising the global energy system will require the use of a mixture of technologies, encompassing renewable resources, carbon sequestration and gas,” Mr Breeze said.

“There are and will be offshore areas where wind, gas and carbon sequestration activities will overlap, and
Asset believes a holistic approach should and will be taken to ensure energy is produced in an optimal manner.

“For the people and the businesses of NSW – and the environment – this is good news and indicates the potential of the Hunter to providing a solution to the state’s long-term energy needs. Gas and renewables together could mean huge investment and jobs for the
Hunter.”

He said it had been shown in the North Sea that offshore wind and gas are compatible and Offshore wind and gas energy co-exist in the North Sea. (Credit:
Kaisn/Shutterstock) complimentary.

“Different energy systems can co-exist to deliver stable and affordable clean energy supplies that meet the needs of homes and businesses, as well as the environment,” Mr Breeze said.

He said it made sense to locate gas energy near wind so that it could provide “back up” when required.
“It is becoming increasingly evident that as the transition proceeds across the globe that weather dependent energy such as wind and solar will require significant dispatchable backup and that gas is an acceptable solution,” Mr Breeze said.

Mr Breeze said that PEP-11 has the potential to be a significant gas resource, based on sampling studies conducted by Advent and confirmed by independent experts.

In January, the Federal Court overturned former Prime Minister Scott Morrison’s decision to block PEP-11 and now the company is waiting for the National Offshore Petroleum Titles Administrator (NOPTA) to re-assess the permit application, which will then go to NSW and Federal Resources Ministers for a final decision.

Asset Energy has an 85 % interest in PEP11 and is a wholly owned subsidiary of Advent Energy Ltd.

See Advent Energy’s submission to the call for submissions on the offshore Hunter wind energy zone: https://shorturl.at/esxyT

Media inquiries: Nathan Vass 0405 7 7 0