EnergyQuest has forecast a potential shortfall of up to 133 petajoules across Australia’s east coast gas supply in under five years.

In making its forecast, EnergyQuest has levelled criticism at the Australian Energy Market Operator (AEMO).

According to EnergyQuest, assumptions by AEMO in its recent 2015 Gas Statement of Opportunities not only paint an unrealistically optimistic picture of gas supply for domestic use in the region, but brush aside public and industry concerns about the expected tightening supply of gas for domestic use along Australia’s east coast.

Such a complacent view from the country’s official energy forecaster, runs the risk EnergyQuest says, of discouraging urgently needed east coast gas development, particularly in NSW and onshore Victoria.

EnergyQuest Chief Executive, Dr Graeme Bethune, pointed to a number of shortcomings in the AEMO analysis.

“First, AEMO’s estimates of demand for gas by the Queensland LNG projects appear to us to be too low and would be insufficient for them to meet their contracts,” Dr Bethune said.

“Second, AEMO’s estimates of production from the Cooper Basin are too high, higher than the producing companies themselves expect, particularly in view of cuts to capital spending due to the fall in the oil price.

“Third, AEMO significantly under-estimates gas reserve risk, relying on production from fields to which geoscientists might only assign a probability of success of 10 per cent or which are not yet demonstrated to be technically or economically producible.

“Federal and State Governments have internationally respected geoscience agencies but there is little sign that this expertise has been called upon by AEMO in preparing the GSOO.

“Correcting for these factors changes the east coast gas demand and supply balance from AEMO’s meagre surplus of 22 petajoules (PJ) in 2019, to a 133 PJ shortfall in that year.

“This also demonstrates how sensitive the forecasts are to the demand and supply assumptions.
“Small changes in assumptions can radically change the outlook. In effect, the AEMO report ‘assumes away’ the shortage that it was predicting only two years ago,” Dr Bethune said.

“As a result, it sees no need for coal seam gas (CSG) developments in NSW or the proposed new pipeline from the Northern Territory.”

Dr Bethune said AEMO’s erroneous conclusions would do little more than act as a barrier to further east coast gas development in NSW and onshore Victoria.

“Unfortunately, the GSOO shows no recognition of the fact that, with the fall in the oil price, energy companies exploring for, developing and producing gas on Australia’s east coast, are slashing their capital spending and workforces.

“These actions simultaneously collide with the massive growth of LNG along the east coast within a relatively small domestic gas market. This is an unprecedented market development globally and has, as yet, uncertain results on longer term volumes of gas available for domestic consumption.

“In these circumstances, any analysis by AMEO should focus on what are clearly ongoing gas market risks, rather than assuming them away.”

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