by David Convery, Managing Editor, The Australian Pipeliner
But it’s far from business as usual in the Sunshine State with the energy landscape throughout Queensland promising to be quite different in 2030 than 2020.
LNG
Although LNG production remains strong and Australia is still one the world’s largest exporters of the energy source, slumping global oil prices and the COVID-19 pandemic are having an effect. Despite its strength in this market, Queensland is not immune, and the negative impacts are expected to become more pronounced as the situation progresses.
A wave of asset write-downs have occurred across Australia’s energy industry in 2020 including on major projects in the northeast. Santos said it would recognise non-cash impairments of Gladstone LNG (GLNG) of US$640-700 million before tax (AU$899-984 million), while Shell reported a post-tax impairment of US$8.15 billion (AU$11.46 billion) relating to the Queensland Curtis LNG (QCLNG) and Prelude Floating LNG projects.
Origin Energy also reported an impairment of US$720-770 million (AU$1.01-1.08 billion) at Australia Pacific LNG (APLNG), which celebrated the shipping of its 500th LNG cargo in June 2020. In its July report, analyst EnergyQuest says these asset write-downs, extended project maintenance operations and lower oil prices, along with cargo deferrals resulting from COVID-19 saw LNG revenues across Australia down by 52 per cent compared to the same month in 2019.
EnergyQuest says the next few years will be “characterised by economic disruption, uncertain energy demand and lower prices”, which would create opportunities for buyers but challenges for producers.
“We expect one and possibly two of the Gladstone LNG trains to be closed as increased gas volumes are diverted from the LNG projects to the domestic market,” the report says.
“As we get into the 2030s the east coast LNG contracts will begin to tail-off. At the same time, as the closure of coal-fired power generation accelerates, the demand for natural gas to back-up renewables is likely to grow.”
New gas
While a level of uncertainty surrounds the LNG export industry, Queensland hasn’t been deterred from its search for new gas supplies. Since 2015, the state government has released close to
80,000 km2 of land for gas exploration, more than a quarter of which is reserved for the Australian domestic market.
Queensland Minister for Natural Resources, Mines and Energy Dr Anthony Lynham says the sector has generated billions of dollars in economic stimulus over the past few decades.
“Queensland’s gas and manufacturing industries support more than 200,000 jobs now and have generated thousands more pay packets across the state since 1990,” he says.
“Government, industry, unions and health authorities have worked closely together throughout the pandemic to keep the resources sector operating and keep safe their people, and the communities they live and work in.”
Dr Lynham says Queensland has a plan for its COVID-19 economic recovery and “part of that plan is building on our traditional strengths like the resources industry and maintaining a pipeline of projects is essential.”
One example of the push for new gas is Senex Energy’s Surat Basin project, which the company marked as complete in June 2020. Following a final investment decision on the $400 million development in October 2018, Senex successfully built and commissioned natural gas facilities at Roma North and Project Atlas, before completing an 80 well drilling campaign in the region.
The project also including the successful construction and commissioning of Jemena’s Atlas Gas Pipeline that was completed in October 2019 and connects to the Wallumbilla Hub.
“We are proud to have worked closely with our partners Jemena and Easternwell, landholders, community and other stakeholders to successfully develop these critical natural gas resources for the east coast market,” says Senex Managing Director and CEO Ian Davies.
“Further, we are appreciative of the strong policy settings of successive Queensland Governments, enabling the development of these valuable resources. With proved and probable (2P) natural gas reserves in excess of 600 PJ across our Surat Basin acreage, Senex will be delivering natural gas to the domestic market for decades to come.”
The Mahalo Gas Project (MGP) in central Queensland is looking to follow a similar path, with joint venture partners Comet Ridge, Santos and APLNG granted more petroleum leases in July 2020. The new lease awards have been issued for a 30-year term and are the final regulatory approval required for the project to move forward to production following the Commonwealth Government Environment Protection and Biodiversity Conservation Act approval in May and the Queensland Department of Environment and Science environmental approval in June.
Comet Ridge Chair James McKay says Comet Ridge and its partners have undertaken many years of exploration, appraisal and development planning activities with the MGP well positioned to deliver meaningful gas production into the domestic and export market.
“The streamlined approval process shows it has the support of the Queensland government and we look forward to working with our joint venture partners in progressing Mahalo towards a final investment decision,” he says.
Meanwhile, Arrow Energy announced a final investment decision on its $10 billion Surat Gas Project in April 2020, with Arrow CEO Cecile Wake saying the decision demonstrated the company’s confidence in the project, despite low oil prices and the COVID-19 pandemic causing other major projects to be deferred.
“Arrow recognises the current uncertainty caused by COVID-19 and oil-price volatility and will ensure that its development plans retain sufficient flexibility to manage these evolving challenges while bringing more gas to market,” he says.
“The decision to sanction phase one of the Surat Gas Project and commence construction this year is good for Queensland.
“It will mean more jobs, more opportunities for local companies and other economic benefits for regional Queensland, which has been home to Arrow for more than 20 years.”
Phase one will consist of more than 600 wells in the Surat and Bowen basins where Arrow currently operates five gas fields, with the company aiming to deliver first gas in 2021.
Green gas
A couple of major gas names took steps forward in the last six months in pursuit of cleaner energy. Australian Gas Infrastructure Group’s (AGIG) Australian Gas Networks (AGN) arm announced in March it would construct a $4.2 million hydrogen plant in Gladstone, which will be the first renewable hydrogen facility able to deliver up to
100 per cent blended hydrogen across the city’s customer base.
Hydrogen Park Gladstone will produce approximately 20 kg of hydrogen per day
using certified green power from a local power grid, which will then be blended into the gas network. The facility will include a 175 kW polymer electrolyte membrane electrolyser,
water demineralisation system and process cooling equipment with a modular design that can be scaled up in future to produce for Gladstone’s increasing needs.
AGN CEO Ben Wilson says AGN is proud to partner on this project with the Queensland Government, which has set a target to be an Australian leader in renewable hydrogen production by 2030.
“The project supports Gladstone’s vision to be a key hub for Queensland’s domestic and hydrogen export industry, just as it is for natural gas today,” he says.
“Queensland, and Australia as a whole, has the potential to be a renewable hydrogen superpower, with jobs and economic growth from supplying clean energy to regional and eventual metropolitan wide markets.”
Elsewhere in the state, the Australian Renewable Energy Agency (ARENA) announced it will contribute $1.1 million in funding to APA Group’s renewable methane pilot project. In development with Southern Green Gas, the project aims to demonstrate the technical and commercial benefits of an integrated hydrogen electrolysis and renewable methane production system, with the data generated to be used to assess the feasibility of a larger, commercial scale production.
The demonstration plant will be located at APA’s Wallumbilla Gas Hub near Roma, Queensland, and will produce approximately 620 kg of hydrogen per year, which will be converted into 74 GJ of methane that can be injected into the East Coast Gas Grid.
With a total project cost of $2.2 million, the renewable hydrogen will be produced using an anion exchange membrane (AEM) electrolyser that uses water from the atmosphere and is powered by solar photovoltaic (PV).
APA CEO and Managing Director Rob Wheals says the funding was a great example of government support for innovation in Australia’s energy industry.
“We know the science of producing methane. This unique project is the first step in testing whether it is possible on an industrial scale to create methane using solar-generated electricity, water and CO2 from the atmosphere,” he says
“With this project we’re aiming to determine whether this carbon neutral process might be part of a broader green energy solution for the future, and if our pipelines can be used to transport pure renewable energy domestically or for export.”
This article was featured in the October 2020 edition of The Australian Pipeliner. To view the magazine on your PC, Mac, tablet or mobile device, click here.
If you have news you would like featured in The Australian Pipeliner contact Managing Editor David Convery at dconvery@gs-press.com.au
