The Country Liberal Party says “it is going for gas,” quoting the possible creation of 13,600 jobs and $3.7 billion in tax revenue, while the Australia Institute says you almost couldn’t give gas away, and the cost of fracking would make petrochemical manufacturing in the Territory unviable without massive taxpayer subsidy.
Opposition Leader Lia Finocchiaro relies on the Scientific Inquiry into Hydraulic Fracturing in the Northern Territory for the benefits and says: “Over $400 million has already been spent on exploration in the Beetaloo, creating jobs and income for Territory businesses.”
The enquiry was initiated by the Gunner Government in 2017. Now widely regarded as a device for bringing in fracking, long-time Labor supporters are fuming that they were sold out by the ALP on the issue.
As things stand, Government and Opposition, conventionally seen as the two major parties, are in favour of fracking while most of the remaining field in next month’s election, especially the ascending Territory Alliance, is opposed.
The Australia Institute says: “The NT Government’s Power and Water Corporation had large surpluses of gas from the late 2000s.
“The NT Government spent millions trying to find takers for this gas and would likely have provided it at near-zero prices to projects that could provide significant employment.
“Yet employment in gas-related manufacturing sectors declined from 209 people to 193 people between 2006 and the 2016 census. Now with new supply from fracking likely to be high cost, and links to export and east coast markets in place, the era of cheap gas in the NT is over.”
The institute says developing petrochemical industries in this context is very unlikely: “Economic stimulus should be directed to labour-intensive service industries like tourism and healthcare.
“This report raises serious questions around the credibility of the Gunner Government and its plans for a major fracking industry,” according to Terry Mills, former Chief Minister and leader of Territory Alliance, as quoted by the institute.
“Territorians need an honest conversation about fracking, not pipe-dream promises to develop industries that have been very difficult to establish in the Territory.”
Mr Mills would likely now include the CLP in his observations.
“If gas-based manufacturing couldn’t develop in the NT with near-free gas, it can’t be viable with expensive fracked gas,” says Rod Campbell, report author and Research Director at The Australia Institute.
“Employment in gas-related manufacturing sectors actually declined while the NT taxpayer was paying for gas that the Territory couldn’t use.
“Taxpayer-backed, foreign-owned gas projects like Blacktip and the Northern Gas Pipeline have already cost Territorians dearly.
“The subsidies that would be required to establish petrochemical manufacturing based on fracked gas would throw good money after bad.”
Mrs Finocchiaro, who was not available for an interview, said in a release she wants to standardise “the determination of gross value in consultation with industry and removing the process of individual producers negotiating deals which creates uncertainty, administrative cost and delay”.
That would be putting a stop to a nifty system under which the companies piled on expenses until little or no profit was left and consequently no royalties had to be paid.
This would “simplify the petroleum royalty regime and bring the Territory in line with other Australian jurisdictions and best global practice by retaining the current ad valorem rate of 10% at the wellhead rate,” says Mrs Finocchiaro.
When we reported on the issue in May she would not name a percentage “before the election”.
Now she is. But what is the wellhead price? Who sets the wellhead price?
As we reported: “The Net Value, part of the current hybrid system, is calculated according to this formula: Add up items downstream from the mine called “costs, capital recognition deduction, eligible exploration expenditure and additional deduction”. Then deduct that sum from “Gross Realisation”.
The royalty percentage is applied to that result. In what way are those deduction different to the ones used to rort the system now?
The questions we would have liked to ask her:
• How much gas was produced in the last available reporting period?
• What was its sale value?
• How much did the NT receive in royalties?
• For what purposes?
• What was the net gain or loss for the NT?