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WA to be well supplied with gas for next decade – report

WA to be well supplied with gas for next decade – report

Photo by Bloombeg

30th November 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The latest gas statement of opportunities (GSOO) released by Western Australia’s Independent Market Operator (IMO) has forecast that the state’s gas production would continue to exceed demand between 2016 and 2025, with potential gas supply at least 107 TJ a day greater than current demand, and increasing to as much as 400 TJ a day by the end of the forecast period as several domestic gas production facilities started operations.

The IMO said in the GSOO that domestic gas consumption would increase by less than 1% a year over the forecasted period, remaining nearly flat.

This slow growth was owing to the expected decrease in gas-fired electricity generation in the South West interconnected system, which IMO said would be partially offset by increased gas consumption from a number of other projects.

In parallel, while the recent fall in international oil prices has caused some uncertainty in the market, resulting in gas producers being less willing to supply to the domestic market in the short term, given the reduced domestic gas prices, the IMO expected potential supply to increase towards the end of forecast period as international oil prices recovered.

Furthermore, the start-up of the Gorgon and Wheatstone domestic gas projects in 2016 and 2018 respectively would also increase production capacity and the availability of gas supply, the IMO said.

Meanwhile, the end of joint marketing for the North West Shelf joint venture and the Gorgon joint venture at the end of December this year, was expected to result in more individual gas suppliers, which would also increase competition in the sector.

It was hoped that the greater competition would allow for customers to renegotiate their gas requirements, or secure a more competitive price.

The Australian Petroleum Production & Exploration Association (Appea) said on Monday that the IMO’s GSOO added to the recently International Energy Agency World Energy Outlook findings that highlighted the important role that natural gas could play as a competitively priced and cleaner-burning fuel for both industrial and residential use.

“The use of domestic liquefied natural gas and compressed natural gas facilities has the potential to make gas supply accessible to remote areas of Western Australia while also increasing gas demand as a substitute for diesel,” said Appea CEO for the Western Region, Stedman Ellis.

“The GSOO forecasts that Western Australia will be well supplied out to 2024 on the back of significant investment in gas processing capacity. Importantly, domestically focused gas producers have the processing capacity in place to supply around 95% of Western Australia’s domestic gas needs.”

Ellis noted that there have been significant discoveries of natural gas onshore in the Mid-West in 2014 and 2015, that were trying to find a way to market.

“However, the state’s gas reservation policy continues to stifle the increased energy security, investment, jobs and royalties that will come with a growing onshore gas industry.

“The state government should focus on facilitating investment in the onshore sector by means other than penalising investment in offshore gas. With the recent collapse in private sector investment in Australia, removing the reservation policy would send a strong signal to investors that Western Australia is open for business.”

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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