PERTH (miningweekly.com) – Gas producer Senex has struck a conditional gas supply agreement with energy supplier AGL for the supply of up to 42 petajoules (PJ) of natural gas from January 2025 from its proposed Atlas expansion in Queensland’s Surat Basin.

Senex CEO Ian Davies said Australian energy customers would benefit from the additional supply to the domestic market represented by this agreement, and from the more than A$1-billion investment in Queensland’s Western Downs region.

“During this cost-of-living crunch, one certain way to put downward pressure on prices for energy customers is to deliver new gas supply to market, and our domestically-focused Atlas expansion can do just that,” Davies said.

“More secure and reliable gas supply will help to keep the lights on for Australian households and keep small manufacturers in business.

“The Australian Competition and Consumer Commission (ACCC) and Australian Energy Market Operator have forecast structural gas shortfalls in the east coast market without new supply in the coming years and have warned of the urgent investment needed to ensure enough supply.

“This agreement will add critical new supply to the domestic market when it’s needed most. It also comes at a time when the urgency – and challenge – to meet Australia’s emissions reduction and renewables targets is building every day,” said Davies.

“Gas plays an essential “firming” role for renewable generation by providing fast and reliable electricity to support intermittent, or “non-firm”, solar and wind generation.

“Gas is the critical safety net, maintaining the stability of the electricity grid and supporting Australia’s manufacturers as the road to net zero becomes increasing complex,” he added.

The new gas deal between Senex and AGL and the commencement of gas supply in 2025 is conditional only on the timely restart of Senex’s Atlas expansion which was put on hold in December 2022 following government intervention in the gas market. Project recommencement requires the satisfactory resolution of regulatory arrangements and the receipt of certain Commonwealth approvals, Senex said on Friday.

The Queensland Resources Council (QRC) welcomed the conditional agreement, with CEO Ian Macfarlane saying it confirmed the importance of the Queensland domestic gas sector to Australia’s energy security.

“By providing up to 42 PJ to AGL, Senex is ensuring that households can keep the heating on, and industry can keep running across Australia’s eastern seaboard,” Macfarlane said.

“The extra gas supply provided by Senex will be particularly welcomed by smaller manufacturers that don’t have access to the wholesale market. Boosting supply is the key to lowering energy prices for households and businesses, and the extra domestic gas to be supplied by Senex will contribute to that.”

The QRC has called on the federal government to clarify its new regulatory frameworks, to allow for the expansion of the Atlas project.

“Given the critical need for more gas to provide ongoing energy security as Australia transitions over coming decades to renewables, the federal government needs to do all it can to ensure the Atlas expansion proceeds,” Macfarlane said.

“Queensland’s gas producers are doing the heavy lifting when it comes to providing the domestic energy supply Australia needs, but that can only continue with the right government policies and support.”