Market data from the Australian Energy Market Operator’s 2016 Gas Statement of Opportunities released in March 2016 shows gas reserve development is required by 2019 to maintain long-term gas supply adequacy in eastern and south-eastern Australia.
The Gas Statement of Opportunities (GSOO) issued by the Australian Energy Market Operator (AEMO) reports on the adequacy of eastern and south-eastern Australian gas markets to supply maximum demand and annual consumption over a 20-year outlook period. It is based on data provided by industry participants up to 10 December 2015.
The 2016 GSOO forecasts that, under a medium (considered most likely) scenario:
- Proved and probable gas reserves (considered the best estimate of commercially recoverable reserves) start to deplete from 2019.
- To maintain gas supply adequacy between 2019 and 2035, development will be required to ensure contingent and prospective resources and undeveloped reserves become commercially recoverable.
- Gas transmission and processing infrastructure is adequate to meet forecast total domestic gas and export liquefied natural gas (LNG) demand until 2029.
- Short falls totalling 50 petajoules (PJ) are forecast in Queensland (Gladstone and Townsville) between 2029 and 2035. This assumes:
> no additional infrastructure development to address projected pipeline or processing facility constraints, and
> an increase in demand for gas-powered generation (GPG) as forecast in the 2015 National Gas Forecasting Report (NGFR)
AEMO Managing Director and Chief Executive Officer Matt Zema said that the need to convert undeveloped gas reserves and resources into working gas fields from 2019 reflects the expected doubling of total annual gas consumption in eastern and south-eastern Australia over the next five years to 2020 as Queensland’s liquefied natural gas (LNG) export facilities ramp up production.
If export LNG demand is taken out of the picture, Mr Zema said the need to convert undeveloped gas reserves and resources into working gas fields from 2019 becomes clearer still.
Source: AEMO GSOO
The above figure shows eastern and south-eastern Australia’s domestic gas demand (excluding export LNG demand) under the medium (considered most likely) scenario.
Mr Zema said that as developed gas reserves decline from 2019, the timely development of undeveloped gas reserves and resources will be key to ensuring there is sufficient gas supply to meet forecast domestic demand to 2035.
Mr Zema’s view was backed by the Chairman of the Australian Competition and Consumer Commission (ACCC) Mr Rod Sims who, in a recent keynote address to the Australian Domestic Gas Outlook Conference said eastern Australia’s gas market is experiencing a triple whammy of the introduction of LNG, oil prices falling faster and further than nearly anyone thought possible and regulatory uncertainty making life very difficult for the upstream sector. He said in this environment commercial and industrial (C&I) gas users have had a particularly difficult time and there are important ramifications for all Australians.