New Queensland coal seam gas production and an expanded northern gas pipeline may alleviate the east coast gas shortage.
Earlier this year the n Energy Market Operator forecast a gas shortfall of 54 petajoules in 2018 and 48 petajoules in 2019.
While a deal has since been struck with large gas producers Origin, Shell, and Santos, to meet the domestic supply gap, the price of gas has continued to rise.
Now, plans to widen links between the east coast energy network and the Northern Territory’s gas fields, as well as new Queensland gas sources due to come online before the end of the year, may drive down gas prices due to increased supply.
The Northern Territory government’s proposed gas pipeline has expanded its scope to supply gas to the eastern seaboard, via Queensland and South .
The NT government is progressing plans for the construction of a gas pipeline connecting the northern and eastern gas markets, known as the North East Gas Interconnector or the Northern Gas Pipeline, with first gas due next year.
“The Northern Territory has excess gas and is more than willing to sell to the east coast,” Northern Territory Resources Minister Ken Vowles told Fairfax Media.
Working with energy company Jemena, the 622-kilometre pipeline will run from the Territory’s Tennant Creek gas hub east to Mt Isa in Queensland, supplying gas from the offshore Blacktip field in the Bonaparte Gulf. Plans also exist to potentially connect the gas line to South ‘s Moomba Hub.
“The gas pipeline connects the Northern Territory to the Eastern Gas Pipeline Grid,” Mr Vowles said.
Jemena’s executive general manager of corporate development, Antoon Boey, said to further reduce the projected gas supply shortfall and energy crisis “large new sources of gas need to be produced and delivered to the markets as quickly as possible”.
“The simplest way to solve the east coast gas crisis is to develop new sources of domestic supply,” Mr Boey said.
Early long-term agreements have already been signed, with the NT Power and Water Corporation to supply excess gas from its current contracted supplies to Incitec Pivot through the Northern Gas Pipeline for about 10 years.
While Mr Vowles declined to state specifically how much gas could be provided to the NEM on an annual basis, saying it depends on supply and demand, n Petroleum Production and Exploration Association South n and Northern Territory director Matt Doman said it could make a major impact on AEMO’s projected shortfall.
“The levels of gas the Northern Territory could supply are not insignificant, Mr Doman told Fairfax Media.
“While the gas will likely not be directed to Sydney and Melbourne, it will see uptake in Queensland, particularly in Mount Isa, which has energy-hungry processing facilities,” he said.
“This in turn will free up gas from south eastern Queensland to be piped south, instead of north west, down to New South Wales and Victorian markets.”
This is not the only pipeline proposed to supply gas from the Northern Territory to the east coast markets.
Ebony Energy, an NT coal-to-gas company, also plans to connect to the east by tapping into the 670-kilometre proposed southern pipeline surveyed as part of the North East Gas Interconnect network.
The project aims to supply 50 petajoules of gas – more than the predicted shortfall of 48 petajoules of gas in 2018 – through South , for more than 25 years.
Jemena also plans to extend the Northern Gas pipeline beyond Mt Isa, to connect the Galilee Basin coal seam gas fields with the Bowen Basin and export hub of Gladstone.
Queensland gas company Senex Energy will this week bring 30 new coal seam gas wells online, with production to begin before the end of the year.
Senex aims to supply up to 50 terajoules of coal seam gas to Santos’s GLNG operations daily – or a petajoule of gas every 20 days – from its Surat Basin gas project over the next 20 years.
These forward-looking plans to lift the forecast shortage belie the difficulty the sector has faced, according to a report released by the n Petroleum Production and Exploration Association on Monday.
An ongoing slump in commodity prices that began in 2014, coupled with peak spending as gas projects ramped up, saw the industry record a net operating loss of $4.5 billion for FY2015/16. This was a massive downward movement compared to a loss of $600 million in FY 2014/15, and marked the worst result since the survey began in the late 1980s.
APPEA chief executive Malcolm Roberts said much of this loss was driven by average oil and gas prices falling by nearly 30 per cent year on year.
“Comparing the years 2014-15 and 2015-16, the industry saw the average price it received for the sale of oil and gas fall from $69.10 to $48.63 on a barrel of oil equivalent basis (boe),” Mr Roberts said.
This was the lowest boe price in more than a decade
“The fall in realised prices, coupled with a reduction in n oil and condensate production, creates a challenging framework for the industry,” he said.