Moomba gas blast — energy debacle continues

Bob Briton

On New Year's Day bleary-eyed revellers in South Australia (SA) 
woke to hear that a major explosion and fire had shut down 
Santos' gas plant at Moomba in the far north of the state. Unlike 
the case of an explosion in 2001 — when Colin James Sutton had 
died during maintenance work — nobody had been injured this 
time. Workers quoted in the media put this down to good luck 
rather than good management and went on to outline major 
shortcomings in the plant's safety arrangements.

The state's Energy Minister Pat Conlon had been up since 6am 
dealing with a new crisis in his nightmare portfolio. He had 
already spent much of 2003 trying to look like a victim of the 
big corporations behind the scandalous price hike for household 
electricity in SA. Authorities were soon on the phone telling the 
top 50 gas users in the state to cease production so that 
emergency and household supplies could be ensured.

Fortunately, the SEA Gas pipeline linking SA to Victorian 
supplies had been completed in the week prior to the blast. Those 
sources were able to replace about four fifths of what is 
normally drawn from the Moomba plant. Cooler than usual weather 
meant that gas-driven electricity generators were making only 
light demands on stocks.

Industry sources claimed that a stretch of three days above 32 
degrees C in Adelaide would have caused the air conditioners to 
be switched on and brought the whole system crashing. Some big 
manufacturers like Holden and Mitsubishi had not come back from 
their Christmas-New year break.

Moomba's NSW customers were able to get their gas from the 
Gippsland fields in Bass Strait via Eastern Gas Pipeline. The 
supply situation is still described as "tight".

Victoria was able to satisfy demand by increasing production at 
Esso's Longford plant. This facility was itself the site of an 
explosion and fire which claimed the lives of two workers and 
shut down gas supplies for two weeks in 1998.

What does the future hold?

For a long time Santos was unable to give Pat Conlon a time line 
for the completion of repairs. Initial reports put it at two 
weeks. Others said it could be six months. For the moment it 
seems that it will take until the end of March.

Moomba has partially restored production. It can now deliver 
about 40 percent of its normal summer production. The frustrated 
Minister has appointed Hans Ohff to oversee the job of repairing 
the plant. Ohff was managing director of the Australian Submarine 
Corporation at the time of the manufacture of the controversial 
Collins class submarines.

Mr Conlon is considering calls for an inquiry with the powers of 
a royal commission to investigate the disaster.

Early in the piece the SA Minister contacted his counterparts in 
Victoria, NSW, the ACT and the Northern Territory to deal with 
the crisis and, most importantly in these days of the wild 
corporate west, to prevent profiteering from the players in the 
gas industry. Mr. Conlon took a good deal of flack from business 
quarters for insisting that only large consumers would have to 
pay higher prices for their gas from retailer Origin Energy. They 
are not happy, either, that restrictions apply and that 
"intermittent shortages" are still on the cards.

NSW householders have been given no such assurances. In fact NSW 
domestic gas bills are set to rise by $50 this year as a result 
of the Moomba emergency. The Hunter Valley Gas Users Group and 
Weston Aluminium claim that they are being charged extortionate 
prices for their supplies. They claim to be paying $5.50 a 
gigajoule for gas from Victoria instead of the usual $3.50 for 
the Moomba variety.

"That's a hefty slug", Weston Aluminium's Garbis Simonian told 
The Herald Sun. "It reflects a shortage but one wonders as to the 
actual prices that are being charged."

Duke Energy, which runs the Victoria NSW pipeline said it had not 
changed its transport charge of 65c a gigajoule since the fire. 
Esso denied that it was profiteering. It was still delivering gas 
at contract prices determined before the crisis. New non-contract 
prices reflect the cost of supply in the current environment. 
Nobody, it seems, is making a cent out of the higher prices.

The ministerial task force established to keep corporate 
behaviour within bounds appears to be toothless. The pipelines 
connecting the various eastern states are not regulated. 
Companies have been on an honour system not to gouge more than 
they have from the market. Pat Conlon praised TXU, for example, 
for not charging more for the gas flowing from Victoria to SA. 
"Frankly, they could have charged whatever they wanted for gas", 
he said to the Adelaide Advertiser.

Industrial companies in affected states are reporting serious 
problems reaching their usual production levels. Pasminco says it 
will have no choice but to cut output from its Port Pirie 
smelter. Onesteele in Whyalla is at full production but only by 
using dearer electricity instead of gas for its power needs. Tens 
of millions of dollars are said to be disappearing from the 
bottom lines of manufacturing companies.

Law firm Thomson Playford predicts multi-million dollar 
compensation claims coming before the courts for years to come. 
The effect on prices of all of this only can only be guessed at. 
A recent letter to the editor of the Advertiser spoke for the 
majority of South Australians:

"Remember the good old days when [public utilities] ETSA supplied 
our electricity, SAGASCO our gas and the E&WS our water? At least 
you knew the only cost increases were due to your own usage."

Given the crisis-ridden nature of the state's power 
infrastructure, it is only a matter of time before such 
sentiments move from being a wistful sigh to an immediate 
political demand.

Union demands, as set out by the Australian Workers' Union, for 
legislation like the Major Hazard Facilities standards enacted in 
Victoria after the Longford tragedy must be met straight away 
before more lives are lost.

Of course, public ownership and control of the power industry 
with a large dose of re-regulation could put a halt to market 
manipulation and failure to maintain regular production and 
safety standards.