Lifting Labor’s fracking ban in the Northern Territory could...

Lifting Labor’s fracking ban in the Northern Territory could theoretically boost the local economy by as much as $17.5 billion or $674 million annually in real terms between next year and 2043, and create up to 13,600 jobs over the same period, according to a new study.
The results of some long-awaited economic modelling, commissioned by the Gunner government’s independent fracking inquiry and unexpectedly released today, also show that the federal government could expect to receive up to $5.5 billion in extra taxes.
The 230-page report, produced by ACIL Allen Consulting, found the change in real income for the rest of Australia (excluding the NT) from letting the northern gas industry rip could be as high as $12.5 billion from 2018—2043, accounting for lower gas prices, taxes and other benefits.
The study was commissioned by The Scientific Inquiry into Hydraulic Fracturing in the NT, which is chaired by a former judge, Rachel Pepper.
Justice Pepper said the study indicated the most visible economic impact from gas development would be increased NT government revenue of between $29 million and $143 million annually. Income from mining royalties is presently around $175 million per year.
“This report is important in order for the Panel to properly assess the economic impacts and risks of hydraulic fracturing as set out in the Terms of Reference,” Justice Pepper said.
“It is also significant because the only other economic study available to the Panel is the Deloitte Access Economics’ report commissioned by the Australian Petroleum Production and Exploration Association in 2015.”
That study found that developing the Territory’s shale and tight gas resources could add as much as $1 billion per year to GSP and $50 million annually to local coffers, averaged over the two decades from 2020. It also argued major gas development could create an extra 4,200 to 6,300 full-time-equivalent jobs. The Deloitte study was dismissed by environmentalists.
The ACIL study was initially supposed to consider three scenarios, one of which contemplated allowing fracking only in the best-explored Beetaloo sub-basin near Katherine. ACIL found that was too difficult because there was not enough localised information.
Instead, ACIL considered five hypothetical scenarios: a baseline case where the moratorium remains in place; a “calm” scenario where exploration goes ahead, but the gas is found to be uncommercial to produce; a “breeze” scenario involving producing around 100 terajoules of gas per day; a “wind” scenario involving producing around 400 terajoules per day; and finally a “gale” scenario targeting production of around 1000 terajoules per day — the most ambitious.
The report’s authors stressed that they assessed only the potential economic impacts of shale gas development, not whether such an industry would be viable in the Territory. The study’s findings, therefore, represent conjecture. There is no certainty that if the moratorium is lifted, a thriving industry will develop.
ACIL “formed the view” that the potential benefits of unconventional gas development depended strongly on whether the fracking moratorium was partially or fully lifted. Partial lifting made the most ambitious scenarios very unlikely.
“If there is only a partial lift in the moratorium, … there is less of an ability for a potential shale gas industry to find the most commercial shale gas deposits,” the report said.
The study deemed the “calm” scenario (failure to commercialise) very likely to occur under either a partial or full lifting of Labor’s fracking ban. The probably of the “breeze” scenario (minimal development) was only “high” under a full moratorium-lifting. The most ambitious “gale” scenario was deemed unlikely under either condition.
That suggests that the most likely outcome of lifting Labor’s ban (excluding the case of no commercial development) would be an overall “wealth impact” to the Territory of around $36 million annually or $937 million to 2043. Under that scenario, the rest of Australia would benefit by about $3.4 billion over the same period.
Territory GSP would lift by around $196 million per annum ($5.1 billion to 2043), and around 2,100 FTE jobs would be created in total or about 82 jobs per year.
The Territory government could expect to receive about $25 million annually in extra revenue ($757 million over the 25 years to 2043) and the federal government around $1.3 billion in total or $50 million annually over the same period.