PERTH (miningweekly.com) − Australia’s natural gas production is expected to triple to over 6 000 petajoules in the next decade, energy economics group EnergyQuest said on Monday.
CEO Graeme Bethune said Australia was the world’s liquefied natural gas (LNG) “supermarket”, with more than 15 projects proposed for development and eight projects likely to be under construction by the end of 2011.
Speaking at the inaugural Australia Gas 2011 conference, in Sydney, Bethune outlined the opportunities and challenges for the Australian gas sector in what he labelled the “golden age of gas”.
“In terms of LNG development, Australia is definitely having its moment in the sun as the world’s LNG supermarket,” Bethune said.
“However, this won’t last forever, with proposals to export LNG from the US and Canada gaining momentum,” he said.
Bethune said that locking in as many Australian projects as possible was essential while conditions were favourable, adding that the development programme being undertaken in Australia came with many benefits, both for Australia and its Asian customers.
“When the current eight projects are completed, Australia will be supplying 10% of China’s gas needs, 20% of Japan’s needs and 30% of Korea’s needs, with major economic and environmental benefits for those countries.
“LNG will join iron-ore and coal as a third world-leading Australian commodity export.”
EnergyQuest estimated that the value of LNG exports was expected to grow from around A$10-billion a year currently, to over A$40 -billion.
“However, executing these projects has many challenges, including costs, resources, changing government policies, natural disasters and local politics. Eight projects is more than has ever been attempted in one country before and there are yet further projects in the queue.”
Bethune said some projects were already behind schedule and over budget, adding that these challenges were unlikely to be “deal breakers” individually but cumulatively were likely to lead to delays, higher costs and lower profitability.
He also said major domestic gas buyers faced challenges of higher gas prices, difficulties in obtaining contracts and changing patterns of gas demand.
“It’s a brave new world for domestic gas, which is facing the triple whammy of LNG, higher costs and climate change policies - all at the same time.
“Some major domestic gas buyers have protected themselves against these changes with long-term gas purchase contracts and/or vertical integrating by taking interests in gas fields - however other users are more exposed,” said Bethune.