Australian gas pipeline and power distribution firm Jemena has been at the forefront of the country's biogas sector through its Malabar facility in Sydney, while continuing to supply natural gas and eyeing hydrogen blending. Argus spoke to managing director David Gillespie on the sidelines of the Financial Review ESG Summit in Sydney about the company's future and how he views Canberra's future gas strategy. Edited highlights follow:
Your thoughts on the future gas strategy, which was released with quite a bit of fanfare. What's the substance behind it?
It's a piece of work that to me is very science backed. And ultimately the whole system needs to transition. It can't just be a view of one technology doing the heavy lifting. I think it's a strong acknowledgement of the role of gas that's going to be here, for not just firming of renewable energy in the future, but also those hard to abate industrial sectors.
Ultimately over the long run I think gas itself is a fuel that's going to have a decarbonisation journey of its own. So it really promotes a conversation around getting down the path of a whole of system reduction of the energy sector's carbon footprint.
Regarding biogas, are you seeing any kind of levers in the works to encourage production?
Definitely there are green shoots. We've had the Malabar facility certified from a green power perspective and that's a great step. We're having really good engagement with government around inclusion of any purchases of that biomethane in the national greenhouse gas reporting, so if you buy certified biomethane you'll get the benefit for that in terms of emissions intensity of your business. We hope that's achieved within the next 12 months.
Ultimately a strong market signal to drive investment will be a renewable gas target that will see us with very clear investment signals around the role that will play in terms of its future mix and scale, first and foremost for the industrial load that is hard to abate.
Do you have an idea about what that target might look like and what sort of percentage?
I don't. What I would say is if you take just the Sydney basin, two-thirds of the gas that's flowing through it is for industrial use, roughly 60 PJ/yr (1.6bn m³/yr) of gas. If you can decarbonise half of that through economically rational projects, proximate to the network, then you're on a pathway to making big inroads in the country's most populous state.
We're looking at projects that are more scaled than the [2.5mn m³/yr] Malabar facility, more in the 1-2PJ range. So if you can encourage renewable gas further with targets, I think you'll really start to see some momentum.
Where's the 200 TJ/d (5.34mn m³/d) Eastern Gas Pipeline (EGP) reversal project at?
The [12km] pipeline to connect the [2.4mn t/yr] Port Kembla LNG terminal to the EGP was completed in December and the terminal construction will be complete by the first quarter of 2025, ahead of commercial operations from winter 2026. So the reversal activities we are completing will be lined up to be delivered by 1Q 2026.
I don't think there's any new gas supply outside of LNG terminals that has a clear pathway to market in terms of approvals and timeframes. We're absolutely supportive of encouraging new supply but ultimately the most near-term solution is LNG terminals.
Port Kembla's injection capacity is just over 500 TJ/d, about 40pc of the Victorian load today. So you're still going to, I think, need more supply over the long run as well. But this is going to be the first realistic option in the market.
