PERTH (miningweekly.com) – A new report by the Australian Energy Market Operator (AEMO) has highlighted the risk to domestic gas supply by 2023 if operations at the Port of Kembla gas terminal (PKGT) are delayed.
In its latest Gas Statement of Opportunities (GSOO) report, the AEMO has forecast an improved outlook for gas supply until at least 2026 across the eastern and south-eastern gas systems, if committed field developments and pipeline expansions proceeded as planned, with operation of the PKGT commencing before the 2023 winter.
The PKGT is strategically located in an existing industrial port with experience in hydrocarbons. The terminal will be located 6 km from the existing Eastern Gas Pipeline, which provides a major natural gas arterial between Victoria and New South Wales.
At a forecast capital cost of A$250-million, the project could supply more than 75% of New South Wales' gas needs.
The AEMO said on Monday that delays to the PKGT project, and certain conditions such as a 1-in-20 maximum winter daily demand in Victoria, coinciding with peaks across southern regions, power-system events that significantly increasing gas-powered generation of electricity, or gas production outages, could all lead to supply risks for the winter of 2023.
AEMO group manager for forecasting, Nicola Falcon, said the announcement of the PKGT, Australia’s first liquified natural gas (LNG) import terminal, has improved supply capacity with an estimated injection of up to 500 terajoules per day.
“This development comes at a critical time, as existing Victorian production is declining faster than previously projected,” Falcon said.
“Our annual analysis shows that without the PKGT, the decline in flexible gas from existing fields would mean we need to rely heavily on storage, and increasingly on constrained pipeline infrastructure to meet the needs of gas consumers, especially during high demand days in winter,” she said.
AEMO’s GSOO also highlighted that the gas sector is on the cusp of transformation, with changes in consumption patterns forecast and alternate supply sources being actively developed.
“Australia’s energy sector is going through a rapid transition, driven by changes in consumer behaviour and efforts to decarbonise the system,” Falcon said.
“This report recognises the potential of electrification, fuel switching to hydrogen, the Australian government’s vision for a gas-fired recovery and LNG imports to all influence investment opportunities in the gas sector.
“Investments to address forecast supply gaps in the second half of this decade need to consider the transformation underway and be adaptable to manage changes in gas consumption.
“There are a number of initiatives at both Commonwealth and state government levels that could change the market and impact the outlook described in the report, including proposals to drive more gas into the system,” she said.
The National Gas Infrastructure Plan being developed by the Federal Department of Industry, Science, Energy and Resources is considering a number of pathways to unlock gas supply and improve efficiency in the east coast gas market.
Minister for Energy and Emissions Reduction Angus Taylor said the government is committed to a gas-fired recovery that will see Australian gas working for all Australians.
“We have been taking action to help secure the gas supplies that are vital to our economic recovery to avoid potential shortfalls and price hikes,” Taylor said.
“The supply of reliable, affordable gas will keep downward pressure on energy prices and the lights on for Australian businesses and households.
“Gas will be even more important as Australia continues to be a world-leader in the renewables sector, with one in four Australian households having solar installed.”
Minister for Resources, Water and Northern Australia Keith Pitt added that the government has a detailed plan to ensure more gas supply.
“Our Strategic Basin Plan announced last year will prioritise five areas for development with real potential to deliver more gas into the domestic market, beginning with the Beetaloo basin in the Northern Territory,” Pitt said.
“I recently announced the guidelines for a A$50-million grants programme that will encourage and speed up exploration in the Beetaloo and that means more jobs sooner and more major investment sooner.
“We will identify, and progress other basins with major gas reserves providing further economic opportunities, particularly in regional areas.”