PERTH (miningweekly.com) – Western Australia’s gas supply is expected to exceed demand until 2026, however, the balance is expected to tighten between 2027 and 2028, new data from the Australian Energy Market Operator (AEMO) has shown.

In its 2020 Western Australia Gas Statement of Opportunities (WA GSOO), the AEMO noted that Western Australia’s demand for gas in the two years beyond 2028 could exceed supply.

“The WA GSOO notes that there are options to alleviate the gap, including undeveloped gasfields not currently in the forecasts, that may be developed to serve the domestic gas market,” said AEMO executive GM for Western Australia Cameron Parrotte.

The report forecasts an annual decline in potential gas supply of 2.8% between 2021 and 2030, in line with reserve depletion at existing production facilitates and comes as liquefied natural gas (LNG) projects, including Browse and Scarborough, have been delayed owing to market dynamics, exacerbated by economic conditions resulting from the Covid-19 pandemic.

A positive outlook for major gas-consuming projects and commodities is forecast to lift demand at an average annual rate of 0.7%, with the mining sector alone expecting 1.6% annual growth. COVID-19 conditions have increased the appetite for WA commodities, particularly iron-ore and gold, which is expected to support domestic gas demand in the short term to 2022.

As in prior years, the 2020 WA GSOO highlights the interdependencies between the domestic electricity and gas markets, with additional renewable energy generation expected to influence gas demand for gas-powered generation (GPG).

“As the energy industry transforms, the growing linkages between Australia’s gas and electricity sectors mean that events occurring in one sector could have strong impacts on the other,” said Parrotte.

“With the continued uptake of renewables and behind-the-meter solar generation, including the entry of large-scale renewable energy generation capacity in 2020, GPG in the South West Interconnected System (SWIS) is expected to decline at an average annual rate of 0.4%.”

The Australian Petroleum Production and Exploration Association (Appea) said that the report highlighted the need for development of prospective gas resources to ensure the market remained adequately supplied as existing fields in production started to decline.

“As with previous decades, natural gas will underpin the energy requirements of the people and major industries of Western Australia in the decade to come. Reliable, low emissions energy production has never been more important to support the recovery of WA’s economy from Covid-19,” Appea Western Australia director Claire Wilkinson said.

From 2021 to 2030, Western Australia’s domestic gas supply was expected to benefit from the development of many key projects including Scarborough, Waitsia Stage 2 and West Erregulla, she added. Three backfill gasfields for existing gas production were also expected to support supply, including Beharra Springs Deep, Corvus and Spartan.

“Like all gas developments, bringing projects to fruition is a complex technical and commercial challenge, and with the industry facing a double-whammy of demand destruction and low oil prices due to Covid-19, we need to ensure policies and regulatory settings continue to support responsible resource development,” Wilkinson said.

“The global pandemic has led to some project investment decisions being delayed, and it’s critical this does not result in permanent flight of investment capital from Western Australia, and indeed from Australia, along with the community and economic benefits that such investment brings.”