EnergyQuarterly December 2021. Net zero targets, record LNG exports, $180m LNG cargoes, east coast gas prices up 29% qoq

The December 2021 EnergyQuarterly report has just been released, with comprehensive Australian energy data for the September Quarter 2021 and the year to September 2021 plus analysis of the latest developments. 
The cover highlights the increasing role of banks in pushing the world towards net zero. In just over a decade since the global financial crisis banks have gone from global pariahs to climate messiahs. What is going on? Have they all suddenly got religion or are there other motives at play too? 
At least the banks are giving their shareholders decent returns. If energy companies were not in the dock for causing climate change, they certainly should be for delivering terrible returns to shareholders.
The last few months have been dominated by climate change issues, most prominently with COP 26, and important announcements by both the government and opposition. The ghost of Tony Abbott still stalks climate policy, with both the government and opposition policies promising painless routes to net zero.

The December report has a detailed summary of the latest IEA World Energy Outlook, which is essential background to climate change considerations. We also look at the COP 26 decisions and ask where this all leaves energy companies. We also look at state emissions reduction targets. Achieving its target of a 50% reduction by 2030 would require NSW to close all coal-fired power stations. 

The biggest announcement of the quarter was the go-ahead for Woodside’s Scarborough LNG project. However, Scarborough and Barossa are the only two new LNG projects Australia has going while the North West Shelf is already starting to decline. We ask what’s next for Australian LNG?

Other highlights include:

  • East coast wholesale domestic gas prices (both spot and contract) increased by 28.7% qoq in Q3 .  Spot prices increased in November to $10-13/GJ. Domestic spot prices remain well below international spot prices, which are around $40/GJ, but high international spot prices are certainly encouraging strong exports from Gladstone, including high-priced spot cargoes, which could have been worth over $180 million each.
  • Domestic gas prices in WA are also significantly higher. WA wholesale domestic gas prices, as measured by ABS, were 7.0% higher qoq in Q3 2021.
  • The share of coal power generation (CPG) in the NEM slumped to 62.3% in Q3, a record low, and gas power generation’s (GPG) share fell to 6.1%, a Q3 record low. Renewables reached a 23.7% share. Total clean energy (including hydro) was 31.6%. 
  • In South Australia the share of renewables has grown from 66% in September to 76% in November, with the gas share slumping from 33% to 24%.
  • National petroleum production climbed to a quarterly record in Q3 2021, driven by record LNG exports
  • Australia exported 21.1 Mt of LNG in Q3 2021 – a quarterly record. The strong performance continued into October, when the industry shipped a record 7.23 Mt (105 cargoes), up from 6.96 Mt (101 cargoes) in September.
  • National oil production increased from 9.6 MMbbl in Q2 2021 to 10.4 MMbbl in Q3 2021 thanks to good results from Woodside’s Vincent project and the NWS, and a rebuild of volumes from the Santos-operated Van Gogh project.
  • South Australia is at the centre of boom in exploration for natural hydrogen, which began with the chance rediscovery of historical reports of hydrogen results from two wells drilled in the 1930s. From a starting point of zero activity in February 2021, SA now has 18 Petroleum Exploration Licences (granted or applied for) from six companies targeting natural hydrogen. The combined area under permit is 570,000 km2 or 32% of the entire state.
  • Gas production in New Zealand continues to decrease rapidly, while a new report commissioned by government on the outlook for gas supply has confirmed what we already knew – policy is driving down production and sidelining the gas industry long before the country has the energy alternatives it needs.

The 166-page report also has 67 Tables and 64 Charts, providing the latest numbers on Australian energy in 2021.

Further infomation, including the brochure with full table of contents, can be obtained by clicking here.