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Thursday, 31 May 1973
Page: 2972

Mr CONNOR (Cunningham) (Minister for Minerals and Energy) - Before dealing with the Senate's amendments I propose to amend clause 13, which reads in part:

Clause 13.

(1)   Subject to sub-section (2), the functions of the Authority are -

(a)   to construct pipelines for the conveyance of petroleum recovered from Australian petroleum pools to centres of population and points of export with a view to the establishment of national integrated system of such pipelines, and to maintain and operate those pipelines;

(b)   to convey, through the pipes operated by the Authority, petroleum belonging to the Authority or to other persons; and

(c)   to buy and sell petroleum, whether in Australia or elsewhere, and the Authority shall carry on business for the purposes of performing those functions.

I move:

In sub-clause (1), after paragraph (c) insert the following paragraphs:

(d)   to ensure continuity of supplies of natural gas, that is free from impurities;

(e)   to ensure that natural gas supplied by the Authority is available at a gate-valve delivery price that is, at all times, uniform throughout Australia, after making due allowances for differences in the calorific values of natural gas obtained from different sources; (0 to ensure that condensate, petroleum gas and other substances derived from natural gas are retained and processed in Australia in order that they may be available to augment supplies of motor spirit and similar fuels obtained from indigenous sources; and

(g)   to secure, control and retain reserves of petroleum adequate to meet the long term needs of the Australian people.

The Government wishes to spell out in the greatest clarity, for the information of the Senate on the return of this Bill to it, the full range and scope of the functions of the Pipeline Authority. Amendments contained in clause 16A as inserted by the Senate would reduce the Authority to the basis of a common carrier and in fact substitute public investment for what would have been substantial private investment in a pipeline.

The policy of the Government, as established by its Party conference in 1971 is for the 'transmission of natural gas by an interstate ring main to ensure continuity of supplies and uniformity of price'. A national authority must think and act in national terms. There is already uniformity of motor spirit pricing in the major capital cities of Australia. The larger States have similarly introduced uniformity of bulk electricity charges to county councils and local government corporations throughout their terms. To match uniformity of energy charges, our objective is to ensure uniformity of heat and fuel prices. This has particular relevance to the future development of inland provincial cities and major and medium sized country towns located within economic service distances of the proposed trunk line system, and which the Authority will supply at uniform prices. This objective is of equal importance to the decentralised cities which we propose to establish or expand.

Honourable members may not realise that there is considerable disparity in the calorific value of natural gas, and also the percentage of impurities which it may contain. The BTU - British thermal unit - content of natural gas ranges from 1050 to 1320 per cubic foot in the major producing areas which will be linked by the pipeline grid. To permit, without regulation at the well head gate valve, the entry of natural gas with any of its undesirable associated gases such as carbon dioxide and nitrogen would produce chaos in the system. Each producer, in the rights of using a common carrier, could set a rival and excessive pricing structure according to its whim and belief as to what the market would stand. Only by purchase by the Authority could the pipeline truly function. Again the Pipeline Authority would need to insist upon freedom from impurities, of which the most noticeable is carbon dioxide, and ranges up to 40 per cent in certain of the Gidgealpa consortium field output.

Another feature unknown to honourable members is the quantities of liquid condensate and petroleum gas and other similar derivatives of hydrocarbons which need to be separated from natural gas, and again vary vastly as between producing centres. These elements are contained in 'wet' gas and can range as high as 70 barrels or more per million cubic feet. These condensates and gases are commercially 'stripped' and retailed separately. These constituents are capable of being restructured in suitable refining processes, known as isomerisation and alkylation, into high grade motor spirit, of 100 octane rating, without the need for any anti-knock additives.

I have been informed by the Hydrocarbons Branch of my Department that, in aggregate from the proved and possible reserves, and at a conversion factor into motor spirit of 65 per cent, they would yield 1,620 million barrels. By comparison, in the refining of Bass Strait crude, the volume of motor spirit obtained is 51.5 per cent of the volume of crude oil. Applying this conversion factor to the total Australian reserves of crude oil, the motor spirit equivalent of these crude oil reserves at present available is 1,280 million barrels. From this it will be seen that there is here a source of additional motor spirit which exceeds by 25 per cent the much vaunted Bass Strait potential. Only 65 per cent of the present crude through-put of Australian refineries comes from Australian reserves, the residue is imported. On this basis, our recoverable Australian crude oil will be exhausted in 12 years. The potential from restructuring of these hydrocarbons into motor spirit would provide an additional 15 years supply. Suitable refining facilities can be provided by a new refinery or modification of an existing plant. Implicit in the Senate amendment is the-

Mr Fairbairn -I rise on a point of order, Mr Chairman. The Minister said: 'Implied in the Senate amendment'. Surely we are not considering the Senate amendment at all at present. The Minister has moved for the insertion of paragraphs (d), (e), (f) and (g) to sub-clause (1) of clause 13.

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