Reserve Development Needed to Meet Gas Demand - Media Release
A new report by the Australian Energy Market Operator (AEMO) shows eastern and south-eastern Australia have sufficient gas resources to meet demand over the next 20 years, provided industry develops those reserves in a timely way to meet growing demand from both the domestic and liquefied natural gas (LNG) export markets.
The Gas Statement of Opportunities (GSOO) shows how the gas market is evolving with gas fields currently in production reaching the end of their economic life, existing long-term domestic gas supply contracts nearing expiry and LNG exports expected to start in 2014.
The report also illustrates the emergence of a secondary LNG export market, which is primarily driven by international gas prices rather than domestic production and transmission costs. This LNG export market is having a significant impact on the domestic market.
“The relatively small volume of uncommitted available reserves, combined with a large proportion of reserves committed or earmarked for LNG projects, may create challenges for domestic supply,” said AEMO Managing Director and Chief Executive Officer Matt Zema.
“Forecast domestic gas demand for a number of proposed large industrial projects currently exceeds the capacity of the pipelines to supply gas in Gladstone, Queensland from 2013. Competition for gas supply may impact the timing or scope of these proposed projects,” Mr Zema said.
Growing potential for Queensland LNG exports is expected to result in LNG production trains being built in eastern and south-eastern Australia. This is to support the Asia-Pacific market, which currently accounts for nearly 60% of world LNG demand.
There is a projected increase in LNG exports from Australia, requiring gas reserves of between 43,000 PJ and 53,000 PJ. If reserves are not developed in a timely way, potential supply shortfalls to the LNG export and domestic markets may be seen towards the end of the period of increasing LNG demand in 2016.
In the medium to long term, depletion of gas in the Cooper-Eromanga basins may lead to opportunities to further develop reserves to avoid insufficient contracted supplies to New South Wales.
As conventional resources are depleted or committed to LNG exports, Coal Seam Gas (CSG) and other shale or tight gas reserves will be developed and used by the domestic market.
The report also shows that no new Combined Cycle Gas Turbine (CCGT) installations are required for at least a decade because of lower electricity demand growth, and competing investment in renewable generation to meet the Large-Scale Renewable Energy Target (LRET). CCGT would require a higher carbon price and lower gas prices to compete with other generation sources. However there is ongoing need for gas peaking generation during periods of high electricity demand.
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