The Economics of the Gas Supply Industry by Abbott Malcolm

Author:Abbott, Malcolm [Malcolm Abbott]
Language: eng
Format: epub
ISBN: 9781134837854
Publisher: Taylor & Francis Ltd

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1978 283.1 9,082 0.031

1988 597.3 11,164 0.054

1998 650.2 3,281 0.198

2008 1833.0 2,001 0.916

Source: Australia, Commonwealth Bureau of Census and Statistics (1908–1973); Australian Bureau of Statistics (1972–2007).

It is generally expected that transmission pipelines are constructed and operated either by the resources companies developing the natural gas reserves or by the distribution companies operating in the cities (or a combination of them). Yet neither of these primary approaches occurred in regard to Australia’s natural gas industry development, where state and national government agencies were established that built and operated the pipelines. This was not because of a lack of interest on the part of private companies in building these transmission pipelines, but because there was concern expressed by policymakers that the owners of these pipelines would have some degree of monopoly power.

When the natural gas resources were first developed in Australia, it was envisaged that in each major city only a single source of gas would exist for each individual city. Even though there were long-term forecasts that a national gas grid would be constructed that would enable the transporting of gas from multiple sources to each city, it was initially envisaged that for a decent amount of time a single pipeline from a single source would bring gas to each major center.

The first government-owned transmission pipelines to be created were in the late 1960s in South Australia and Victoria. In South Australia, the state government decided to create the Natural Gas Pipelines Authority of South Australia in mid-1967, with the goal of constructing and operating an 800 km pipeline from the Cooper Basin to Adelaide. The Electricity Supply Trust of South Australia and the South Australian Gas Company were the two major purchasers of gas from the Cooper Basin.6 The main concern on the part of the South Australian Government was that the natural gas developers in the Cooper Basin would not be able to exploit the major consumers of natural gas in Adelaide.

In Victoria, the state government initially decided to follow a common North American practice, where a third party is introduced to control the pipeline. The government relied heavily in making its decision on a report from March 1966 by Charles Hetherington, a Canadian consultant. The government consequently established the Victorian Pipeline Commission in 1967 to build and operate a natural gas transmission pipeline from the processing plant at Longford in Gippsland to the Gas and Fuel Corporation terminal station on the outskirts of Melbourne (Archer 1979). The Victorian Government subsequently allowed the government-owned Gas and Fuel Corporation to take over the pipeline in 1971. The concern on the part of the Victorian Government was similar to that of the South Australian Government, in that it thought the bargaining power of the natural gas suppliers would be too strong if they built and controlled the transmission pipeline.

Although in South Australia and Victoria transmission pipelines were constructed by government agencies, at the same time there were examples of pipelines being built by the resource development companies. In Queensland,

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