EnergyQuest expects the medium to long-term east coast gas supply challenges to be characterised by economic disruption, uncertain energy demand, lower prices and spending cuts for energy producers.
Highlighted in its East Coast gas outlook to 2040 report, over the medium-term (to 2030) supply constraints will become increasingly evident with the decline of production offshore Victoria and absence of major new gas discoveries.
“Any developments onshore Victoria or NSW will provide some supply increments but are unlikely to materially shift the long-term demand-supply imbalance. Development of the Arrow Energy Surat Basin acreage will provide some domestic gas but is most likely to feed QCLNG (Queensland Curtis LNG),” EnergyQuest reported.
EnergyQuest expects one and possibly two of the Gladstone LNG trains to be closed as increased gas volumes are diverted from the LNG projects to the domestic market.
In addition, drilling in Queensland’s coal seam gas fields increased, therefore boosting production, with the state meeting all of its demand, exporting more LNG, supplying the state and exporting to southern states.
Supply was also augmented by first supplies from the Northern Territory, with a modest increase in Cooper Basin production.
While facing a decline, Victorian offshore production was steady, and short-term prices were the lowest since 2016.
Chief executive officer Graeme Bethune added that the gas market was trying hard to respond to the looming shortage but was constrained by endless approval processes.
“However, oblivious to the parlous state of the economy and threats to security of gas supply, we find two shovel-ready gas projects mired in green tape, the Santos Narrabri project in NSW and the AGL LNG import terminal in Victoria,” Bethune said.
Following the latest rounds if quarterly reports buy Australian oil producers, companies laid bare the full effect of the pandemic-led collapse in oil prices, with Woodside, Beach Energy and Santos suffering.
However, the 2020 financial year saw Western Australian gas production reach a record 424.5 petajoules (PJ), well ahead of record demand of 397.4 PJ.
The report further outlined that east coast gas supply (production plus NT imports) increased by 4.2 PJ quarter on quarter (qoq) from 482.9 PJ to 487.1 PJ.
But LNG exports decreased by 4.4 PJ qoq to 301.2 PJ, leading to an improvement of 12.6 PJ qoq in the gas demand and supply balance.