The Australian Energy Market Operator’s (AEMO) 2018 Gas Statement of Opportunities (GSOO) Report shows things are looking up for the east coast market.
The big news coming out of the report highlights that no supply gaps are forecast before 2030 under expected market conditions.
The risks of shortfalls previously projected for 2019 has been reduced due to changes in the energy market, including:
- Minor reductions (less than 1 per cent) in east coast Australian LNG demand estimates provided by the producers, resulting in greater availability of Queensland CSG for domestic customers. This provides the domestic market with 8 PJ more gas in 2019 than previously expected
- The Northern Gas Pipeline helping further increase supply available to eastern and southeastern gas markets
- Increased commitments to develop alternative electricity generation sources reducing the need for high volumes of gas-powered generation of electricity in the National Electricity Market (NEM)
- The introduction of the Australian Domestic Gas Security Mechanism, resutling in a HoA between the Federal GOvernment and LNG producers for domestic gas supply commitments, and a mechanism to restrict exports if required.
Gas production is forecast to continue increasing beyond 2019 to meet forecast demand, requiring new gas reserves and resources to be developed, with producers voicing intention to develop new reserves and resources to meet forecasts.
However, the report advises that from 2030 additional gas supply infrastructure will be needed to deliver gas to southern customers unless early investment in exploration and development bring highly uncertain – and as yet undiscovered – southern prospective resources to market.
Commenting on the report’s findings, Minister for Energy and the Environment Josh Frydenberg said is good news for customers on the east coast.
“While the gas market remains finely balanced, the gas market on the east coast continues to improve since the volatility of 2016–17,” said Mr Frydenberg.
“Prices are lower, with a fall from a peak of $20 a gigajoule in early 2017 to around $8–10 a gigajoule, as shown by the Australian Competition and Consumer Commission in April.
“Longer term, with AEMO forecasting declines in existing reserves, it is clear that new gas reserves and resources need to be explored and developed.
“This is why the government continues to call on states and territories to remove blanket bans and moratoria on conventional and unconventional gas exploration which numerous inquiries have shown can be undertaken safely, responsibly and sustainably.”