The Australian Energy Market Operator (AEMO) has reported that current supply from exisiting and committed gas developments on Australia’s east and south-east coast will only meet gas demand until the end of 2023.
AEMO released its latest analysis findings last week, further stating that the supply shortage could be met through excess liquified natural gas (LNG) being redirected to meet domestic demand.
Consistent with the findings released in 2019, AEMO’s 2020 Gas Statement of Opportunities (GSOO) and 2020 Victorian Gas Planning Report Update (VGPR Update) have identified a projected shortfall of gas supply on peak winter days in the southern states from 2024, unless more southern supply sources are developed, or pipeline capacity limitations are addressed.
AEMO managing director and chief executive officer Audrey Zibelman said supply from existing and committed southern gas developments was expected to reduce by more than 35 per cent over the next five years, despite the increase in newly committed gas projects over the last 12 months.
“The risk of peak day shortfalls could be resolved by a wide range of different options, some of which are already being explored by industry and governments,” Zibelman said.
“This could include the development of new LNG import terminals, pipeline expansions, or new supply that could result from the Victorian Government’s decision to lift the ban on onshore gas exploration from July 2021.
“The Commonwealth and New South Wales’ Government have also proposed a target to inject 70 petajoules of gas into our energy markets by 2022.”
AEMO had outlined that the decline in supply was due to updated forecasts from gas producers that show several existing gas fields could end production between mid-2023 to mid-2024.
The report further explained that if production from these fields ends earlier, southern states could experience peak winter day supply gaps as early as 2023.
In addition, the forecast also shows that anticipated gas field projects, which are likely to proceed over the next few years, could imported supply until 2026. However, pipeline limitations will still need to be addressed to help meet gas demand during peak winter days.
Any delays to the projects identified in AEMO’s Integrated System Plan, a further reduction in availability of Australia’s coal-fired generation fleet, earlier than forecast depletions of gas fields, long-term changes in industrial activity, changes to the global LNG markets, or the ongoing effects of COVID-19 could all heavily impact current forecasts.
“Close collaboration between AEMO, market bodies, industry and state and federal governments will be a critical component to the success of our energy transformation. AEMO will continue to work closely with all parties in the best interest of consumers, and to shape a better energy future for all Australians,” Zibelman said.