Australia has faced multiple challenges in 2020, from bushfires, droughts and floods to the current COVID-19 pandemic. Now another challenge is looming for Australia’s southern states, with experts predicting an east coast gas shortage in the next four years. The Australian Energy Market Operator (AEMO) says that unless more supply sources are developed, or a pipeline is established to increase capacity, Victoria and NSW could be headed for a gas supply shortfall by Winter 2024. Aiming to mitigate the impending shortage, Australian oil and gas exploration company Blue Energy has been promoting new gas pipeline infrastructure between Moranbah and Gladstone/Wallumbilla.
Blue Energy said that the Bowen Basin southern gas pipeline project has the potential to unlock 15,000PJ of already discovered gas resources to alleviate the impacts of the east coast domestic gas shortage, help provide flexible and reliable electricity to the North Queensland grid, and also assist in Australia’s national economic recovery from the pandemic.
With the company engaging in discussions with the Federal and Queensland Governments, more gas could soon be available to the southern states to both mitigate the predicted shortage and act as the ideal stabilisation fuel for our increasing renewable energy sources.
The approaching East Coast gas shortage
East coast gas users, manufacturers, utilities and households require a reliable long-term supply of gas to reduce uncertainty and risk to their continuous operations, and to give investors confidence.
Gas is not only used for electricity generation, but also for fertiliser production, glass making, plastics manufacturing, brick firing, mineral processing, hydrogen generation and transportation.
Australia has the gas reserves to underpin more than 30 years of stable supply, given the appropriate pipeline infrastructure is put in place.
Multiple Australian experts predict an east coast gas shortage will occur in the next four years unless more supply sources are developed and additional gas pipeline infrastructure is constructed.
Findings released in 2019 in AEMO’s 2020 Gas Statement of Opportunities (GSOO), and the 2020 Victorian Gas Planning Report Update (VGPR Update) have predicted a projected shortfall during peak winter days in Victoria and New South Wales from 2024 onwards.
This shortage in supply is forecast to be caused by several existing Bass Strait gas fields which are projected to possibly end production from 2023 to 2024.
In addition, if these gas fields end production earlier than expected, Australia’s southern states are at risk of experiencing supply gaps by as early as 2023.
Concerningly, the latest industry production data shows Bass Strait production has declined a further 18 per cent year on year, clearly
demonstrating this rapid decline toward end of field life.
Addressing the findings in the GSOO, AEMO Managing Director and CEO, Audrey Zibelman, said that despite new gas field projects
proceeding, more needs to be done to ensure a reliable supply.
“Supply from existing and committed southern gas developments is expected to reduce by more than 35 per cent over the next five years, despite the increase in newly committed gas projects over the last 12 months,” Ms Zibelman said.
Massive CAPEX reductions by major global oil and gas producers, as a reaction to the dramatic oil price crash, also have the potential to jeopardise committed gas project delivery timing.
“The risk of peak day shortfalls could be resolved by a wide range of different options, some of which are already being explored by industry and governments.
“This could include the development of new LNG import terminals, pipeline expansions, or new supply that could result from the Victorian Government’s decision to lift the ban on onshore gas exploration from July 2021.”
Bowen Basin southern gas pipeline project
The looming gas supply shortage for the east coast has highlighted the need for new gas resources and infrastructure, and Blue Energy believes that the development of the North Bowen Basin gas resource would be the quickest solution to the issue.
Blue Energy said that the broader Northern Bowen Basin Gas Province has a discovered resource of approximately 15,000PJ of gas which, based on current market conditions and if fully developed, would be sufficient to support the East Coast domestic gas market for 30 years.
All that would be required is the construction of a single, multi-user 500km pipeline from Moranbah to Gladstone/Wallumbilla, which would be capable of delivering up to 300TJ of gas per day to the domestic market.
Discussing the Bowen Basin southern gas pipeline project with Energy magazine, Blue Energy Managing Director, John Phillips, said that the company was in active discussions with the Federal and Queensland Governments about the benefits of the pipeline project and how it can be funded.
“More gas needs to be brought to market, as the ACCC has been saying for four years now, and more infrastructure needs to be put in place to bring that gas to market to reduce the price to end users,” Mr Phillips said.
“We’ve been actively exploring the concept of starting to bring some of the 15,000PJ of gas that’s been discovered in the northern Bowen Basin into the East Coast market, and alleviate the pressure on gas users and manufacturers that they’ve been experiencing for the last five or six years due to supply issues and price.
“Effectively, the basin is isolated from the southern market because there’s no connection from Moranbah down into Gladstone and Wallumbilla.
There is an existing small diameter pipeline connection going up to Townsville, but it only goes one way at the moment, north, and it needs to come south as well.
“We’ve been talking with the Federal Government and the State Government in terms of the merits of having a pipeline put in from Moranbah and Gladstone or Wallumbilla, and how that would be funded and prioritised, in terms of nation-building infrastructure for the country that will help rebuild and grow the manufacturing base, post COVID.”
Gas paving the road for recovery and renewables
With the pandemic putting a massive strain on the country’s economy, thoughts are turning to how Australia can repair the damage, support industries and create jobs.
A recently leaked draft report from the National COVID-19 Coordination Commission (NCCC) suggests that expanding Australia’s domestic gas industry could support a strong manufacturing-led recovery, with an estimated 85,000-170,000 direct jobs created from the expansion.
The final report has now been submitted to the Prime Minister’s Office for consideration. A leaked copy of the NCCC’s final report was quoted as stating “One of the task force’s primary recommendations is that the Commonwealth underwrite gas demand so new projects have a guaranteed buyer.
Government would group together multiple smaller gas users and if they did not consume all the supply, the government would pay for it.”
The NCCC report, as well as the GSOO report from AMEO, have highlighted the ongoing importance of gas pipeline infrastructure in Australia to secure supply and ensure affordable prices, not just to assist in Australia’s COVID-19 recovery efforts, but to also pave the way for an expanded renewable energy future.
According to data released in the Federal Government’s 2020 Australian Energy Statistics, 21 per cent of Australia’s electricity in 2019 came from renewable energy, up from 19 per cent in the previous year, showing that renewables are expanding across the country, with gas-fired generation also growing to account for 21 per cent of Australia’s total generation.
Mr Phillips said that while it’s clear that renewables continue to expand, it is equally important that there is a back-up energy source, like gas, to balance the intermittency of renewables, and continue to deliver reliable and secure energy.
“Across the country, and indeed globally, you’re seeing a lot of increase in renewables, namely solar and wind, going into the electricity generation process,” Mr Phillips said.
“Now, because of the obvious intermittent nature of solar and wind, you have to be able to call on some sort of reserve power when that solar energy, or wind energy isn’t available.
“We think gas is the ideal symbiotic partner to renewable energy. So I think you’ll find as we get increases in solar and wind energy as part of the energy mix, you will also have to have increases in gas-fired fast start generation capacity.”
With the Federal Government and the NCCC looking closely at the domestic gas market and how it can both support in the pandemic recovery, and back-up renewable energy generation, it’s more important than ever to develop gas infrastructure.
As the east coast gas shortage continues to emerge, the Bowen Basin southern gas pipeline is emerging as a vital piece of infrastructure for the future energy security of the east coast.