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The Australian Energy Market Operator’s 2013 Gas Statement of Opportunities has been released.

The document provides information about the current state of the gas industry in eastern and south eastern Australia and provided an adequacy assessment of natural gas infrastructure to meet demand across eastern and south-eastern Australia over a 10-year period and the adequacy of gas reserves over 20 years.

The 2013 report highlights opportunities for investment in natural gas infrastructure and reserves development needed to address potential shortfalls in eastern and south-eastern Australia.

It is published in accordance with Part 15D of the National Gas Rules 2008 and is based on information available to AEMO as at 31 July 2013, although AEMO has endeavoured to incorporate more recent information where practical.

Some of the key findings in the report include:

  • In the short-term, demand for gas supplying new liquefied natural gas (LNG) export facilities at Gladstone is expected to create opportunities for up to 250 TJ/d2 of additional processing capacity in Queensland and approximately 50–100 TJ/d in New South Wales by 2019.3
  • In the medium-term, opportunities exist for additional processing to supply projected domestic demand growth in New South Wales from 2018. Significant investment will be required over the longer-term in New South Wales, South Australia or Queensland, with Otway Basin reserves being consumed by around 2027.

Significant short, medium and long term trends, potential shortfalls and opportunities include:

Short term (up to 2019)

Trends: LNG export demand growth. Qld potential shortfalls. NSW potential shortfalls during peak periods.

Infrastructure opportunities: Further production development in Qld. Development of new production in NSW. Augmentation of NSW–Vic Interconnect or the Eastern Gas Pipeline.

Medium term  (prior to Otway consumption  in 2027)

Trends: NSW potential shortfalls. Challenges supplying GPG in SA.

Infrastructure opportunities Unconventional gas development in the  Cooper Basin. New transmission route between Qld and NSW.

Long term (2027 onwards)

Trends: Potential shortfalls in all southern states. Flows change after Otway consumption.

Infrastructure opportunities: Significant new production in the Cooper Basin, Surat Basin, or Gunnedah Basin. Significant new transmission capacity for north to south delivery.

Growth in demand for natural gas Gas demand for LNG facilities in Queensland is projected to rise from zero to approximately 1,450 PJ/a4 between 2014 and 2019, posing significant challenges to producers to supply both domestic demand and LNG exports.

In contrast, domestic demand is projected to grow more slowly at approximately 0.9% annually from present consumption of around 620 PJ/a to approximately 750 PJ/a by 2033; this incorporates a projected fall in gas-powered generation (GPG) demand in the short term due to rising gas prices and lower carbon pricing projections. Short-to-medium-term outlook Potential gas supply shortfalls5 may occur in Queensland if facilities that are currently dedicated to domestic demand are prioritised to supply rising LNG export demand. Without further production investment, potential shortfalls in Queensland may exceed 250 TJ/d once all six LNG trains reach full output: This is projected to occur  in 2019.

If production in Queensland and South Australia is prioritised for export, there will be flow-on effects to New South Wales with potential shortfalls of 50–100 TJ/d over winter peak demand days from 2018. Committed and advanced projects in New South Wales6 are not sufficient to completely alleviate these shortfalls without further support from the Moomba–Sydney Pipeline (MSP). Opportunities exist to augment transmission capability between Victoria and New South Wales, increase production in the Cooper Basin, undertake moderate development of the Gunnedah Basin, or develop an alternative transmission route between Queensland and New South Wales.

Existing 2P7 reserves are sufficient to meet projected demand until 2020, until consumption of known reserves in the Denison Trough and Otway Basin begins. This provides opportunities for new field development from that time.

Likewise, consumption of 2P conventional reserves begins in the Cooper Basin from 2025, providing opportunities for further conventional development, or unconventional (shale) reserves development from that time. Consumption of 2P reserves begins in the Bass Basin from 2025 and in the Gippsland Basin from 2026, providing opportunities for further conventional gas development in Bass Strait. Long-term outlook Gas is an abundant resource in eastern and south-eastern Australia. Analysis8 indicates that sufficient reserves are likely to be commercially viable to satisfy projected gas demand for at least the next 20 years.

Despite the availability of gas resources, supply shortfalls may still occur as a result of constraints on existing infrastructure, the timing of new infrastructure, or difficulties and delays in converting resources into 2P reserves. By 2027, consumption of 3P9 reserves and 2C10 resources in the Otway Basin are projected to begin.11 If developed, 3P conventional reserves and 2C resources in the Cooper Basin, Bass Basin, and Gippsland Basin are projected to be sufficient until the end of the outlook period.

Consumption of Otway Basin reserves presents significant challenges for supply of gas to New South Wales, Victoria, and South Australia. Once conventional reserves in Victoria are consumed, current reserves estimates indicate new supply will be required from coal seam gas (CSG) reserves in Queensland and New South Wales, and unconventional reserves in South Australia. Analysis indicates that reserves in any one of these locations are sufficient to supply demand until the end of the outlook period; however, significant infrastructure investment will be required to deliver gas from northern production centres to southern demand centres.

The full report may be viewed here.

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