Mr Malavazos spoke to The Australian Pipeliner recently about the current South Australian energy mix, the challenges posed to the pipeline industry in the state, and why the carbon price could be a positive influence on the industry.
What do you see as the main challenges for the South Australian energy sector, and in particular the pipeline industry?
As far as the energy sector is concerned, it’s really all about getting timely investment in a very competitive market. Particularly from the supply side, the challenge is deploying new energy suppliers at just the right pace with respect to investors reaping and attracting reward.
Obviously with all these pressures that the energy sector is now facing with the possibility of a carbon pricing mechanism, I think the challenge is really getting the right investment in a competitive market to be able to meet those expectations.Article continues below…
What do you see the South Australian energy mix being comprised of in 20 years? What measures do you think the government will be putting in place to achieve this outcome?
Currently in South Australia, there’s lots of movement in regard to the solar and wind energy sectors. South Australia has a lot of investment happing in the geothermal sector, but it’s still very much in the embryonic stage.
You really need large-scale wind to meet the majority of the South Australia’s clean energy requirement and I think it’s an unrealistic potential target. If you don’t get the right carbon price you’re not going to get the right investment in energy.
One of the key challenges the state’s pipeline industry is facing is access to land and encroachment, particularly with urban encroachment. Once upon a time, there wasn’t anybody or any infrastructure within a bull’s roar of the two key pipelines that feed this state; now all of a sudden there are new suburbs encroaching right on top of pipeline corridors.
So in light of that, how do you see the South Australian energy mix being comprised in 20 years time, and in particular do you see gas as a dominant energy in this energy mix?
Absolutely. In 20 years, Department of Primary Industries and Resources of South Australia (PIRSA) is aspiring to obtain a portfolio of secure, safe, competitively-priced low-carbon energy supply. Whether it can become a reality or not will be dictated by technology and the level of the carbon price.
But having said that, our view is that gas, particularly in the carbon-restrained world, is going to be the important, fundamental, transition fuel, and pipelines are going to play an important role in getting gas from wherever Mother Nature decided to put it to the market.
So I can see the pipeline industry becoming a key player in the next 20 years, and regardless of carbon pricing, the availability of gas from the studies we’ve done, both from a conventional and unconventional point of view, is quite extensive. Gas is certainly going to form the foundation of Australia’s energy mix in the foreseeable future in maybe one, two, three, four decades time, and so the pipeline industry is going to be of paramount importance.
What are some of the main issues that PIRSA is currently addressing in regard to pipelines in South Australia?
In a nutshell, what we’re trying to achieve through our legislative role under the Petroleum and Geothermal Energy Act 2000 is an accessible and reliable natural gas pipeline network in South Australia. This remains critical to the security of natural gas supply, available not only in South Australia but across all states and territories.
In terms of the eastern side of Australia, state government’s are actively trying to address issues associated with legislation and promotion regarding maintaining pipeline investment in South Australia, and keeping pipeline corridors and putting aside land for that reason.
Having said that, a key aspect to promoting pipeline investment is ensuring that pipelines are designed, constructed and maintained to a very high standard, and we do that through requiring compliance to the AS2885 standard. It’s a specific requirement in South Australian legislation, and the state spends a lot of resources and time in ensuring that happens.
We believe that the best way to maintain and promote the pipeline community is to ensure it is safe and reliable, and can co-exist with other land uses.
What factors does PIRSA take into account when issuing a pipeline licence?
South Australian legislation requires the state to have an approval process in addition to the AS2885 requirements. Our approval process, which is managed under the Petroleum and Geothermal Energy Act 2000, requires that companies address all environmental, public safety and land access issues in addition to the pipeline integrity and management issues, which are required under AS2885.
Through that process, PIRSA feels that it is a one-stop-shop because it has arrangements with our planning department to make sure issues are addressed, as well as communication protocols in place so that every time land redevelopment or rezoning occurs, we are aware in case there are implications for pipelines.
Could you outline how the South Australian Government is ensuring that Adelaide and other regional cities develop in a way that encroachment around existing pipelines is managed appropriately?
It’s a very simple answer really. At the end of the day the Petroleum and Geothermal Energy Act 2000 requires that the design, construction, and operation of pipelines be undertaken in accordance with the AS2885 standard, which ensures that threats posed by encroachment on pipelines are managed and minimised as long as reasonably practicable.
Furthermore, development proposals that may affect or encroach around pipelines are subject to consultation protocols between persons at the South Australian Department of Planning and the local government.
So I think in a nutshell that pretty much spells out what PIRSA are about; we are open and transparent with relevant landowners and we have a good code on which we can lean on.
The construction of the QSN Link and SEAGas Pipeline completed the final link in Australia’s eastern pipeline network. What have these pipelines meant for the South Australian gas market?
The QSN Pipeline and the SEAGas Pipeline have enhanced Australia’s security of gas supply, which has added additional competitive gas supplies to an already competitive gas market.
It’s basically increased basin-on-basin competition between gas suppliers from the surrounding Bowen, Cooper and Gippsland basins, so as far as we can see, the QSN Link has added the surrounding potential basins to the competition mix.
From South Australia’s point of view, these developments have been instrumental for keeping gas prices competitive and security of supply. We no longer depend solely on the Moomba to Adelaide Pipeline to keep the state’s gas supply secure.
Are there any further measures that need to be put into place to secure South Australia’s gas supply?
We believe that in South Australia the relationships and the feedback PIRSA receives from other potential conflicting agencies – such as the local government or the South Australian Department for Planning – is incredibly supportive, and the basis for that support is very much to do with the way regulation deals with the approval processes, and the pipeline industry.
Because of this openness and transparency in terms of the maintenance and controls, the South Australian Government has a lot of trust in regard to providing energy to the state. What we need to do is continually strengthen those relationships and continue to support them.
How do you predict the proposed Australian carbon tax, if legislated, will affect existing and proposed energy and pipeline projects in South Australia?
I think it will probably benefit the pipeline industry, and the gas industry in particular, because zero-emission technology investment is being restrained.
You can’t cover Australia in wind farms and expect the wind to continuously blow and therefore have base load zero-emission power. I would say that from the near middle to long term, the carbon price will strengthen the gas and pipeline industry. It will become a very important part of the energy security industry in this country.