Third quarter sticker

The east coast gas market balance improved significantly in the September quarter in 2019, with gas production higher by 20.4PJ quarter-on-quarter (qoq) to reaching a record 500.1 PJ in Q3. 

The figures were released in EnergyQuest’s quarterly report for September 2019, highlighting key trends in Australia’s oil and gas production, reserves, prices and development projects.

Other key trends highlighted in the report include:

The new Northern Gas Pipeline (NGP) supplied 6.1PJ, amounting to a total increase in supply of 26.5 PJ quarter on quarter (qoq). 

LNG exports increased but only by 9.1PJ, leading to an east coast surplus of 17PJ. This is the largest east coast surplus since the beginning of LNG exports and a dramatically better outcome than Q3 2018 when there was a deficit of 17.9PJ.

Record CSG production allowed Queensland’s LNG projects to satisfy political pressure to supply more gas to the east coast market while modestly increasing gas exports.

CSG production increased by 6.8 per cent or 23.7PJ qoq to a record 377.2PJ in Q3 2019, driven by QCLNG’s Woleebee Creek (up by 8.9PJ qoq) and GLNG’s Roma (up by 3.9PJ qoq).

NEM generation from gas (GPG) increased by 38 per cent qoq, reaching its highest Q3 level since 2014, with increases in all states except Tasmania. 

Average gas generation output was 2337MW, with Newport, Tallawarra and Jeeralang power stations running at elevated levels to cover coal-fired generator outages.

Short-term east coast gas prices averaged $8.23/GJ in Q3, down by 7.8 per cent from an average $8.93/GJ in Q3 2018 and down by 13.1 per cent from the Q2 2019 average of $9.48/GJ.

Queensland prices were lower than those in the south. The significant fall in prices is likely to weaken the case for tightening the ADGSM.

The WA domestic market is awash with gas. Production again grew strongly to a record 108.5PJ in Q3 2019, up 11.5 per cent or 11.2PJ qoq. Production again exceeded total state demand of 100.3PJ. 

Another major onshore gas discovery, at Beharra Springs Deep-1, has added to potential supply and has its owners, Mitsui and Beach Energy, talking to Woodside about exporting gas through the NWS.

WA wholesale domestic gas prices, as measured by ABS, were steady qoq in Q3 2019, but Woodside’s average price for domestic gas fell 13.9 per cent qoq to $3.55/GJ.

Exploration and appraisal drilling reached a five-year high in Q3 2019, driven by big investment programs by Beach Energy and Santos in the Cooper Basin.

National LNG production reached a record 20.0 Mt in Q3 2019, up from 19.3Mt in Q2 2019 and 18.1Mt in Q3 2018. Q3 2019 LNG production represents an annualised rate of 79.5Mt, exceeding Qatar’s nameplate capacity of 77Mtpa. 

EnergyQuest expects that total Australian shipments for 2019 will be about 75Mt and about 82Mt in FY 2020. Following the commissioning of Prelude, national LNG capacity is 87.45Mtpa.

The last quarter has seen dramatic declines in international energy prices compared with a year earlier. 

The biggest falls have been in spot LNG and coal but oil has also experienced a significant decline. However, the long-term oil-linked contracts that underwrote Australia’s LNG investment boom are still quarantining local producers from a global LNG glut that has taken Asian spot prices to a 10-year low. 

The Australian average LNG price in Q3 2019 was US$8.88/MMBtu (A$11.77/GJ).

The recovery in national oil production gathered momentum in Q3 2019 with a strong start to production at Woodside’s Greater Enfield project. 

National production jumped by 44.3 per cent from 9MMbbl in Q3 2018 to 13MMbbl in Q3 2019 – the fourth consecutive quarterly increase and the highest level since Q3 2017. Production in Q3 2019 was also 24.6 per cent greater than Q2 2019’s 10.5MMbbl.

A decade of declining oil output means Q3 2019 oil production of 140,000 bbls/d is still only a fraction of the peak of 586,000 bbls/d in 2000. However, production of condensate is booming

and rapidly closing the gap between Australian consumption and production of petroleum liquids (oil, condensate and natural gas liquids).

Beach Energy was Australia’s largest oil producer on both an annual and quarterly basis, with equity production of 2MMbbl in Q3 2019 (up 27.0 per cent qoq) and 7.3MMbbl in the year to September 2019 (up 22.4 per cent). However, Woodside was only a few barrels behind Beach and is likely to overtake in Q4 2019.

The start-up of Ichthys and Prelude in late 2018 generated a major boost to national petroleum production in Q3 2019, which jumped by 15.8 per cent or 38.8MMboe qoq to a record 284.8MMboe. 

National production has more than doubled in only four years (up from 133.5MMboe in Q3 2015) thanks to the start-ups of Australia’s four newest LNG projects – Gorgon, Wheatstone, Ichthys and Prelude.

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