EnergyQuarterly June 2021 On the way to Net Zero

The June 2021 EnergyQuarterly report has just been released, with comprehensive Australian energy data for the March Quarter 2021 plus analysis of the latest developments. 

Climate change policies and politics are recurring themes throughout this report. We ask “Who would want to be running Big Oil or Gas just now”  and look in detail at the IEA Net Zero report. There is a widespread belief that achieving net zero emissions will be easy and it can all be done with renewables: wind, solar and batteries. This simplistic dogma is effectively torpedoed by the IEA’s report. .

We also look at some of the unintended consequences of New Zealand’s policy to effectively ban future frontier exploration.The New Zealand government’s plan to close down the petroleum industry is falling into place at much greater speed than anticipated, with dramatic consequences for energy prices and national greenhouse gas emissions.

Nearly 30% of NEM fuel generation now comes from zero emission sources: hydro, wind and solar. Coal, which had an 86% market share back in 2009, was down to 67% in Q1. Wind and solar were 22% and hydro 6%. Gas has been crushed by the combined impact of dominant coal and rapidly growing renewables, slipping to a share of only 5% of NEM generation in Q1.

However the outage at the coal-fired Callide Power Station on 25 May, led to a surge in the share of  gas-fired-generation in Queensland to over 20%

The outlook for gas supply in the southern states for winter 2023 has been looking bleak but just in the nick of time the Queenslanders have stepped up to help out through the combined efforts of APLNGOrigin Energy and APA.  This does not solve the underlying problem of falling Victorian production, just kicks the can down the road.

Other highlights include:

  • Australia’s LNG exports remained at near-record levels in Q1 2021, continuing the strong performance in 2020. 
  • LNG exports to China continue to be remarkably stable. There are seasonal fluctuations, but if these are smoothed out using a 12-month moving average, deliveries have averaged 35 cargoes per month since 2019.
  • Total domestic gas consumption on the east coast was 15.2 PJ lower qoq in Q1, down by 12.4%. Gas-use-for-power (GPG) was down by 15.5 PJ qoq, due to lower electricity demand and prices and increased renewables. 
  • East coast gas supply (production plus NT imports) increased by 3.7 PJ qoq from 462.3 PJ in Q1 2020 to 475.1 PJ in Q1 2021. The increase in east coast production resulted from higher CSG production (up 4.3 PJ qoq) and higher production of 8.6 PJ from conventional gas basins.
  • ·International influences saw higher east coast gas prices despite lower domestic demand. However, domestic gas prices were relatively subdued compared with Asian prices. 
  • Queensland’s LNG projects began 2021 at a slightly lower rate of production than the record level set in Q4 2020, but are still producing at high levels and enjoying an ongoing recovery in prices.
  • National oil production dropped by 15% in Q1 2021 compared to Q1 2020, costing a number of local producers the opportunity to maximise the benefits of a surprisingly strong recovery in oil prices.
  • The Australian Bureau of Statistics series on petroleum exploration expenditure resumed its downward trend in Q1 2021 following an uptick in Q4 2020 associated with the unsuccessful Ironbark-1 well. 
  • An unprecedented level of activity in the Beetaloo Sub-basin over the next six months should be enough to finally answer the big question about commerciality. 

The report also has 67 Tables and 63 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.