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Category: Wool / Rural / Oil and Gas

Gas supply issues could force wool processor to close its doors

Friday, 2 Dec 2016 12:18:10 | Joanna Crothers

Victoria Wool Processors has been unable to secure an affordable gas contract for next year. (ABC News: Cameron Best)

Australia's largest domestic wool producer may have to close its doors because it is unable to get a new natural gas deal, potentially putting 40 people out of work.

Key points:

  • Wool processor offered gas contract for double current price
  • General manager calls for limits on gas exports
  • Industry calls for more exploration

Several suppliers told Victoria Wool Processors at Laverton North, in Melbourne's western suburbs, they were unable to meet the business's demands for gas next year because of a supply shortage.

It takes 110,000 gigajoules of gas to heat and treat the 12,000 tonnes of greasy wool the company produces every year.

David Richie, the company's general manager, said the current contract with Energy Australia expires at the end of the year.

"It's a scary thought to go into Christmas not knowing that you've secured a vital ingredient," he said.

"You can't run these plants without gas."

The business is not large enough to buy gas wholesale and retailers have offered quotes for double the current price, which Mr Richie says will make the company unviable.

In a statement, Energy Australia said conditions in the gas market have made it harder to secure supply.

"Australia depends on reliable and affordable supplies of gas to warm homes, power businesses and to sustain jobs, but today there is less gas available in the market, despite Australia's abundant natural resources," a statement read.

'If you believe in manufacturing, this needs to be sorted out'

Victoria Wool Processors general manager David Ritchie. Photo: Victoria Wool Processors produces 12,000 tonnes of wool each year. (ABC News: Cameron Best)

Mr Ritchie called on the Government to limit the amount of gas exported from Victoria.

"Australia has just become the biggest exporter of gas in the world. If you believe in manufacturing, this needs to be sorted out quickly," he said.

Australian Petroleum Production and Exploration Association chief executive Malcolm Roberts said Australia would run out of gas by the end of the decade unless there was new exploration soon.

"The East Coast gas market is very tight and is becoming tighter and by 2019 there is expected to be a shortfall of supply on the East Coast and that's going to have an impact on households and industry," he said.

The Victorian Government introduced legislation banning exploration and development of unconventional gas, including fracking, earlier this year.

"Gas is obviously widely used in industry and it's critical for the plastics and chemicals industry, the paper industry, fertilisers, the production of a host of products," Mr Roberts said.

Victorians use about four times the amount of gas of residents in Queensland and New South Wales, he added.

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