Moomba plant, Cooper Basin Northern Regional Development Board Energy Security Forum Gas supply – Opportunities and Challenges 17 August 2012

2 Eastern Australia has a significant resource base with geographic and geological diversity. Eastern Australia gas reserves and resources 2 Source: AEMO Gas Statement of Opportunities 2012 (numbers rounded down) 1 Includes Clarence, Gloucester and Galilee 3 Source: ABARE Australian Gas Resource Assessment 2012; Facts Global Energy #

3 Mums & Dads + small commercial Large Commercial & Industrial Power generation  Power reliability  Clean energy Natural gas is the only large scale proven technology to lower emissions Fuelling key power generation  Provides energy security Natural gas is fundamental for every day cooking and heating needs Only source of key domestic energy A crucial industry for jobs and investment Promoting vital jobs, a skilled workforce, investment and infrastructure Why natural gas is important to Eastern Australia

4  Currently being used by some irrigators to displace diesel in generators…  Compressed Natural Gas (CNG) for use in farm machinery  Local Industry (abattoirs, small scale power generation) Mark Rodgers with David Ronald on his farm near Tamarang where an exploration corehole was drilled in Potential for local use of gas… … Relies on enough combined demand in a region

5 East Australian gas demand growth to 2020 Strong LNG demand + Australia’s transition to a low carbon economy is driving unprecedented east coast gas demand growth.  Five LNG trains sanctioned  Gas-fired power generation to substantially increase by 2030 Source: Santos PJ/a Proposed Sanctioned

6 Higher Development Costs Gas-fired Power Generation Demand Carbon Pricing LNG Demand Permanent structural shift in the East Australia gas market Higher demand and costs …… Gas prices will trend towards oil-linked international parity, circa $6–9 / GJ

7 Gas price increases are affordable  Historically east coast domestic gas prices have been relatively flat  Gas cost is a small percentage of end-user price of both gas and electricity – circa 20%  East coast gas prices are low compared to other markets (UK, Europe and Asia) Expected higher domestic gas prices consistent with other energy and commodity price movements over the past decade. Source: BMI Commodity price indices

8 NSW & ACT materially uncontracted post 2017 NSW & ACT will be >90% uncontracted post 2017, but starting in 2015 NSW / ACT Demand and Contracted Supply PJ/a Uncontracted volumes Source: Core Energy

9 Brisbane Canberra Sydney Melbourne Gladstone Gunnedah Basin NSW CSG – a world-class opportunity Gunnedah Basin is world-class with appraisal program confirming confidence and known resources in excess of 12,000 PJ. Minimum 3 years 3-4 years Development Process to Operations The resources are available to meet the required 2017/18 development time frame, but we need to act now to achieve this. NSW CSG industry  $1.5 billion already invested  Over 1,000 potential new jobs  Significant local gas production for the first time  A low carbon alternative to traditional dependence on coal

10 NSW jobs, investment and royalties Gunnedah Basin offers NSW the possibility of significant growth between now and ,900+ jobs created Investment of $16b+ Incl. 200 ongoing full time positions and 1800 during peak construction Plus additional positions within Santos apprenticeship and indigenous employment programs Employment Investment Royalties NSW gross state product to increase by over $15b Regional benefits around $450m pa Substantial new regional infrastructure Royalty payments of over $3bn Plus corporate tax receipts of ~$6.5bn SOURCE: The Allen Consulting Group 2011