Gas can shield transport industry

With abundant local supplies of LPG and LNG transport analyst and managing director of energy group Rare Consulting, Mark McKenzie, told a gaseous fuels conference last week that Australia must secure its energy independence.

"We have a looming fuel deficit by 2030," he says.

"Australia's oil self-sufficiency will decline from 54 per cent in 2007 to less than 20 per cent by 2030 and possibly as low as 10 per cent if forecast new oil supply discoveries are not realised."

McKenzie believes gas is a fuel of the future, particular given that transport consumes three-quarters of conventional oil supplies in Australia.

"There is a good strategic fit for gas," he says.

"The other thing about LPG is that we've got all the infrastructure in place."

Currently there are 3200 LPG filling stations throughout Australia.

"That's one in every two service stations," McKenzie says.

McKenzie sees LPG as a passenger car mainstay with LNG and CNG being more widely used in the heavy duty transport sector.

The benefits of LPG are well documented. It delivers lower emissions, can be used in diesel engines, has lower engine wear and is half the cost of petrol.

Australia too is believed to have about 65 years of gas reserves, according to Geoscience Australia.

McKenzie also believes that newer-generation and more reliable LPG injection systems from carmakers and the after-market LPG fitters will help accelerate demand.

However, another conference delegate, GM-Holden's energy and environment director, Richard Marshall, warned that Australian motorists are unlikely to switch to LPG in any great numbers while petrol prices remaining relatively cheap in global terms.

Government incentives have helped induce buyers into LPG-powered vehicles and its tax-free status means it is cheaper at the pump compared to petrol.

On the LPG excise question, McKenzie accepts there will be some impact on growth once it comes in from 2011 but he says the fuel must start paying its way.

LPG receives no excise until 2011 at which time an excise of 2.5c a litre will apply, increasing by 2.5c each year until July 1, 2015, when it will be capped at 12.5c a litre.

McKenzie says that the Federal Government could use an excise-free inducement for the development of other new fuel technologies like bio-fuel.

"One of the challenges in terms of some of the new fuels, particularly bio-fuels is that they will not be competitive without that excise exemption, ever," he says.

"We should be looking for fuel sources that really just need a window of exemption to allow them to gain a foothold in the market on the understanding that they will be able to pay their way in the future."

Last year about 120,000 ex-factory and retro-fitted LPG cars were sold.

Another conference delegate, Tony Fitzgerald of Orbital Autogas Systems in Perth, expects that by 2015 150,000 LPG-fueled vehicles will be sold each year.

Of those about 80,000 will be ex-factory systems, with liquid injection and sequential vapour systems will take over from older LPG fuel systems.

Less than 5 per cent of Australia's LPG fleet currently use newer sequential injection systems but Fitzgerald believes the rate of growth will accelerate.

"One of the challenges the LPG industry faces at the moment is the range and degree of some of the technology," he says.

"And some of this needs improvement."