QLD’s LNG industry in doubt

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According to a new report by EnergyQuest, a third of Queensland’s $84 billion LNG industry could be shut down by the middle of next decade due to a gas supply shortage.

This would cut output to four LNG production trains from the current six trains built on Curtis Island off Gladstone by three project owners. Underpinning the production noose is an emerging forward reliance for feedstock on gas reserve estimates that could fall well below delivery expectations.

All three projects rely on coal seam gas (CSG) sourced from the Bowen and Surat Basins – a less conventional gas source than feeds Australia’s successful west coast LNG industry.

The report’s findings show that there is now doubt of sufficient Queensland CSG gas being available for the three Gladstone plants to ever achieve full-scale production.

The plants operated at only an average 82 per cent capacity in calendar 2018.

Crunch time is expected by 2025 and will be exacerbated by potential political pressure for Gladstone LNG operators to divert gas to the domestic market.

Any Gladstone plant shutdown is not expected to dampen Queensland’s new status as a major global LNG supplier, but its LNG potential has been summed up as “now is as good as it will get”.

The findings above have emerged from EnergyQuest’s most intensive scrutiny yet of the Queensland LNG sector’s exploration, production, supply, price and market risk outlook.

The work was undertaken over the past year by Adelaide-based and nationally respected independent energy consultancy, EnergyQuest, led by CEO, Dr Graeme Bethune.

EnergyQuest adopted a ‘ground up’ approach to intensely analyse corporate and government drilling data from ~10,000 Queensland CSG wells, reserves bookings for ~60 Authorities to Prospect (ATP), 120 Production Licences (PL) and production data since 2005 for 120 PLs.

The Queensland concerns form part of a broader 130-page EnergyQuest report titled East Coast Gas Outlook to 2036 to be released in full next week. The findings will also be presented to industry peers at the Australian Gas Outlook conference in Sydney from March 4.

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