truth and reconciliation ?, page-11

ABC News 27/09/17

Australia's largest gas companies have assured the Federal Government they will increase supply to the eastern states next year, potentially avoiding an energy crisis and export restrictions.
http://www.abc.net.au/news/2017-09-27/gas-export-controls-on-hold-amid-government-agreement/8993254

Extracts….

“Mr Turnbull said introducing export restrictions was not something the Government "relished", but the threat had worked.

"We want to see more exports, but Australians have to come first," he said.
"If there is no other way to prevent a shortfall occurring, we would restrict gas exports.

"But if we are able to achieve commitments that will ensure there is not a shortfall of gas, and that the market functions well and people can buy the amount of gas that they need at prices that reflect global prices, then we don't need to restrict exports."


IMO the solution proposed by Turnbull at least seems plausible.

It appears to be is achievable without significant upgrading of gas pipelines and would probably be the line of least political resistance to sort out both supply and pricing reasonably quickly.

I noticed that on the ABC tonight that the market was reasonably comfortable with this approach with not deterring overseas investment.

My guess is that the impact of this will be that pipeline haulage tariff regulation will focus primarily on the main pipeline/s from Curtiss Island.

It was always a fair bet that by the time CTP’s path to market (Of significantly more than 60TJ/Day to CTP/MAC) was up and running, that a number of factors would emerge to resolve the physical East Coast Gas Shortage and associated parity with the global market and this seems to be the way things are developing.

The 2017 AGL Annual Report media release indicates the proposed Crib Point LNG Import facility scheduled for FID in 2019 will have a capacity of 100PJ of LNG/Year.
(By comparison he shortfall projected by AEMO on Monday would be up to 107 PJ in 2018 and 102 PJ in 2019.)

My guess is that the pipeline capicity limitation restricting CTP/MAC/s production from all gas fields (Including the Dukas Prospect) for say 3-5 years which will in turn create a plateau on CTPprofitability and resultant (Boring annuity) share value.

As the path to market opens up to say 500 TJ/day (Say 180 PJ/Year) and provided the cost of capital needed to develop the gas fields allows CTP to produce gas at a competitive cost to market then gas wise Richard Cottee’s vision of becoming a significant gas producer is IMO feasible and he should be given credit for leading CTP in that direction.

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As I started to type this post I was not going to raise this but the above segues into something that has been on my mind for a while and a man’s got to do what a man’s got to do so here goes.

When I ran projects I instinctively knew that my strengths were in front ending and driving the project to virtual completion but, early in the peace, I realised that a new leader & management team with new strengths were needed to carry things forward because this area was not my strong suit.

A mentor who was a real character summed it up, “I always like to pull the pin just that little bit early rather than overstay my welcome and get tangled up in the castigation & recrimination phase” and that’s how the boat in the cartoon in my last post got it’s name.

When I have “Pulled the pin early” I have always suffered a short term financial penalty but it has always worked out that I was much better in the long run.

If I am correct It is about 5 years since CTP changed leadership & focused on Gas Centric operations.



To sum I hold a strong opinion that the prime focus for CTP shareholders should now be to hold their BOD accountable for an objective and timely succession plan that is in the very best interests of share value and dividend appreciation.

Et carpe diem

Best regards

OGP