Stepping on the gas in 2015

January 6th, 2015

It’s shaping up to be a big year for gas development across Australia.

There are significant policy decisions due in several jurisdictions, elections in two States, and the commencement of liquefied natural gas (LNG) exports from the terminals nearing completion on Curtis Island in Queensland’s Gladstone Harbour.

But first, let’s set the scene with some statistics.

The Bureau of Resource and Energy Economics publication Australian Energy Projections to 2050 reports the outputs of a comprehensive modelling exercise, finding:

  • Coal and gas are projected to continue to supply the bulk of Australia’s energy needs.
  • The use of conventional and unconventional gas in industries is expected to grow over the outlook period with projected falls in gas-fired generation offset by growth in the consumption of gas in LNG production
  • Gas production is expected to grow at 2.5 percent per annum to 2050, while its share in total energy production increases from 18 percent to 27 percent from the beginning to the end of the projection period
  • Liquefied natural gas (LNG) exports are projected to increase significantly – by 2050, exports from the western market are forecast to reach 44 million tonnes (2 838 petajoules) for an annual growth rate of 2.6 percent, while growth in the northern and eastern markets stand at forecast growth of 4 and 6.7 percent respectively.

Against that backdrop, the first LNG cargo from the QCLNG project departed Gladstone on 6 January bound for Singapore.

This is a watershed moment for the Australian unconventional gas industry – not only is it the first CSG to LNG cargo in the world, it’s the first east coast LNG export for Australia.

As respected energy industry analyst Graeme Bethune notes, upstream gas fields feeding the QCLNG plant are producing strongly, with the second LNG tanker already in place to receive cargo.

The two other Curtis Island plants – Santos GLNG and Australia Pacific LNG – are due to take first gas during 2015, cementing Australia’s arrival as a world player in the rapidly growing LNG market.

Upstream development to support the LNG export plants will continue through 2015, providing employment and investment across regional Queensland.

On the policy development front, the development of the Commonwealth Government’s Energy White Paper continues, with the final product due in September.

As we previously reported, the Government has identified three goals for the gas industry:

  • Bring on new gas supply as quickly as possible to avoid potential supply shortages so that domestic gas users do not pay higher prices than necessary
  • Improve the availability and quality of market information to improve transparency and competition
  • Implement other gas market development priorities to expedite gas market reform, including the finalisation of a development strategy for the unconventional gas industry

In New South Wales, yet another Parliamentary inquiry is underway into the gas industry, while inquiries into aspects of the gas industry are expected to commence this year in Victoria and South Australia.

The long running West Australian Upper House Inquiry into hydraulic fracturing continues , the Tasmanian Government’s review of hydraulic fracturing is underway, and the Northern Territory Government is expected to release the final report and announce its response to the recently concluded independent Hydraulic Fracturing Inquiry.

State elections are due in the first quarter of 2015 in both Queensland and New South Wales – and the story of gas development on the east coast is shown clearly in the tale of the two States.

In Queensland, where responsible development of unconventional gas reserves has been happening for over a decade, the Queensland Resources Council estimates total direct expenditure by the CSG and LNG industries for 2013/14 was more than $13 billion, with more than 87,000 direct and indirect jobs being supported by the industry.

Meanwhile, in New South Wales, where a moratorium on new development has stymied development for years, increasing the State’s reliance on gas from other jurisdictions, there is light at the end of the tunnel.

The NSW Government’s Gas Plan sets the scene for the further development of the State’s extensive gas reserves, while at the same time balancing the need to ensure the protection of the environment.

The challenge for Governments of all persuasions, at all levels, and regardless of the electoral cycle, is to ignore the hyperbole and fearmongering of anti-industry activist and fractivist groups, and unlock the gate to development of natural gas.

The ERIC team look forward to keeping you up to date with industry developments during 2015.

Along the way we’ll keep an eye on the increasingly outlandish campaigns being waged against the gas industry, correcting the record, challenging the claims, and providing a fact-based, evidence-led response to support the responsible development of the natural gas sector in Australia.

Happy New Year.

 

 

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