Switch to alternative fuels or face $128 billion oil trade blow-out

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Gas gets organised in pitch to Canberra

http://www.goauto.com.au/mellor/mell...25776D000CF890

Switch to alternative fuels or face $128 billion oil trade blow-out, conference told

27 July 2010

By RON HAMMERTON

AUSTRALIA’S transport gas industry has pledged to present a united front to the federal government to plead its case for a gas solution to a looming transport fuels crisis that threatens to blow a $128 billion hole in Australia’s trade balance.

The industry says the transport fuels emphasis has shifted dramatically from air quality to fuel security, with Australian crude oil production set to decline up to 85 per cent in the next 10 years and demand for transport fuels still rising.

The Society of Automotive Engineers Australasia (SAE-A) gaseous fuels conference in Melbourne this week was told that Australia had gone from being self-sufficient in transport fuels in 2000 to importing almost 30 per cent of its needs at a cost of billions of dollars a year.

Queensland Energy Resources CEO Pearce Bowman said that depending on the future price of oil and exchange rates, that import bill could hit between $92 billion and $128 billion by 2030 when up to 70 per cent of crude oil and petroleum products might be imported.

Mr Bowman, whose company is planning to exploit massive shale oil reserves in Queensland, described the situation as a potential time bomb, saying the crunch could come in as little as five years when production of oil from North West Shelf condensate started to drop off, compounding falling crude oil production from Bass Strait and Cooper Basin

He estimated that while local production was in decline, demand for oil could double by 2030 if Australia adopted a ‘business as usual’ approach to consumption.

Several speakers argued that the transport gas industry – covering competing fuels LPG Autogas, compressed natural gas (CNG) and liquid natural gas (LNG) – should put aside differences and devise a united strategy to convince the federal government of the benefits, both economic and environmental, for a gas-powered transport future.

The speakers also expressed frustration at the lack of market traction that gas products of all types had made in Australia over the past 20 years, despite its affordability, greenhouse gas benefits of up to 20 per cent over petrol and diesel and government subsidies on LPG.

Rare Consulting’s Mark McKenzie said the industry had not been helped by divided opinions and competing interests, describing the approach as “unco-ordinated rabble”.

“There has been no industry consensus on what happens next,” he said.

Elgas corporate affairs manager Warring Neilson said Australia had been “too rich”, with too little long-term vision to address the impending problem.

He said that issue could only be addressed if the government shared the industry’s vision that gas fuels could help to solve the looming oil problem, but that could not happen while organisations representing different gases had myriad opinions about the best course of action.

“You cannot prosecute this case on one fuel,” he said. “It will have no credibility – we have to present a united front.”

The delegates agreed at the end of the conference to form a coalition of existing industry organisations with vested interests in a gas fuels future – including LPG, CNG, LNG and motor industry organisations – to formulate a ‘road map’ for presentation to the federal government after this year’s election.

The industry is set to argue that switching to gas in the nation’s passenger car and truck fleets would not only help to achieve greenhouse gas and air quality targets but avert a trade imbalance equivalent to wiping out the economic benefits of iron ore exports.

Energy consultant Kevin Sansome, of Kreative Solutions, told the conference that that gas was not only the best option for the looming energy shortfall “but the only option we have”.

He said Australia’s gas reserves could power Australian transport for 34 years.

“Gas is a transitional fuel – not renewable but the best step towards whatever comes next,” he said.

Natural Gas Vehicles Australasia’s Ollie Clark told the conference that Australia’s natural gas reserves held the energy equivalent of 40 per cent of known coal reserves in Australia and were growing.

He said new coal seam gas reserves in Queensland had effectively doubled the size of known gas reserves, to more than 400,000 petajoules.

“I am told they have found so much (coal seam gas) they have stopped looking,” he said.

Figures presented by Mr Clark showed natural gas cost around a quarter of imported oil-based fuels.

“If we replaced 50 per cent of imported petrol and diesel, this would offer a pre-delivery saving of $11.5 billion a year,” he said.

Mr Clark said that by 2020, Australia faced a $30 billion a year import bill for petroleum and petroleum products, and that would continue to grow.

He argued that the stable price of natural gas made it ideal for heavy transport against the fluctuating and uncertain price of oil, with greater certainty of supply from domestic sources against imported oil in an uncertain world.

According to research by Rare Consulting, liquid natural gas – most suited for heavy transport because of its greater energy density – could provide CO2 benefits of 20 per cent over diesel.

CNG was next best with a 17 per cent improvement, while LPG cut CO2 by 15.9 per cent.