WA at risk of gas supply shortage

December 8th, 2016

The need for more gas development to meet tightening supply has come into sharp focus again, with the independent market operator forecasting some looming problems.

In an overview of the WA gas market , the Australian Energy Market Operator (AEMO) says there is uncertainty over the security of domestic gas supplies despite a seeming abundance of providers.

Key to the report’s findings is that the expected supply of gas is likely to exceed demand over the next 10 years; however the report does cite scenarios where this may not occur.

Delays beyond the projected commencement dates at either the Wheatstone LNG processing plant, due to come online in 2018, or at Gorgon phase two, due 2020, will tighten the WA gas market in 2017 or 2018 when large gas supply contracts with the North West Shelf expire.

As has been recently flagged (and here), exploration in WA’s gas basins is at its lowest level since 1990.

AEMO has added its concern noting that if exploration remains low, new gas projects may not be developed and existing domestic gas production facilities may shut down due to lack of gas feedstock.

With an estimated 92%, or 158,373 petajoules, of Australia’s total estimated conventional gas resources located onshore and offshore in WA, the state natural gas resources are a significant asset in the future energy mix. Which is in addition to an estimated 311,428 petajoules of unconventional resources (tight and shale gas) located onshore in WA.

AEMO’s report states that: “there is a risk to supply after 2021 if there is no continued investment expenditure into the development of gas reserves”.

“Several domestic production facilities may not have sufficient developed reserves to continue operating beyond 2021.

“From 2022, the level of supply is subject to the continued expenditure to develop gas reserves supplying the WA domestic market.”

And while there are those who believe there can be a straight switch from traditional fuels to renewables, former Federal Resources Minister Martin Ferguson outlined recently that the more renewables that are integrated into the network, the greater the reliance on natural gas becomes.

“Without gas, renewables cannot provide energy security, nor can they deliver on their potential for emissions reduction. Gas will remain essential for many years to come.”

Despite some uncertainty, the AEMO also noted opportunities to boost demand for domestic gas in WA driven by potential fuel-switching from diesel to gas and prospective small new mining facilities.

WA is the most gas-reliant state in the country for electricity production, with about 40 per cent of power generated in the south-west grid coming from gas-fired plants, meaning an increase in exploration can play a key role in securing a stable energy future for all West Australians.

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