EnergyQuest has just released its June 2022 EnergyQuarterly report.
The east coast energy crisis is a recurring theme through this report. Gas has been an increasingly minor contributor to NEM generation, mostly in South Australia and Queensland. In Q4 last year gas only contributed an average one percent of generation in NSW and Victoria, minute compared to coal, wind, solar and hydro. However, gas is suddenly being called on to not only back up intermittent renewables but also unreliable coal. Who would have envisaged that? Gas isn’t needed until you suddenly need it, which is the title of Rick Wilkinsons forensic analysis of the forecasts in the latest GSOO on page 20 of the report. Aspects of the energy crisis are also covered under in Section 1, Observations; Section 2, East Coast Gas Market; Section 3, East Coast Electricity Market and Section 6, Energy Prices.
- The federal election two weeks ago is another significant development and is covered in Section 5, Renewables and Section 8, Politics and Policy.
- In the Observations Section we have articles on east coast prices and the energy ministers meeting (page 12), a short update on the global energy crisis (page 14) and reflections from the World Gas Conference recently held in Korea (page 15).
- We also take a step back to look at the 100-year war between gas and electricity, particularly relevant now with calls to electrify everything (page 18). We quote a couple of South Australian politicians who in the 1890s who were saying that what was then the new gas industry was doomed given Edison’s perfection of the electric light globe.
- While things are crazy on the east coast, Western Australia is an oasis of calm, and we have an update from page 45 as well as an update on WA exploration in Section 7.
- Here at EnergyQuest we are not only interested in oil and gas but also in future fuels. In Korea I travelled from Incheon to Daegu in a hydrogen Hyundai, zooming past Teslas. The latest twist with hydrogen is the possibility of using geothermal to produce green hydrogen (page 75).
- The report has our usual updates on reserves, conventional gas, CSG and LNG and New Zealand, PNG and Timor-Leste.
- One of the major issues for Timor-Leste is development of Sunrise LNG, something which has also recently been flagged as a possibility by the operator Woodside. There remain major political, technical and commercial challenges to Sunrise development, whether with onshore processing, floating LNG or piping to Darwin. However it is significant that the Chinese foreign minister recently visited Dili as part of his Pacific tour. This did not get much mention in Australia and the Prime Minister did not stop off in Dili as part of his recent visit to Indonesia. However, what happens in Timor-Leste is of increasing strategic importance to Australia.
Other highlights include:
- The east coast LNG industry continued to perform strongly in Q1 2022, producing 6.0 Mt and operating at an average 97% of nameplate capacity of 25.3 Mt. Production in Q1 2022 was steady with Q1 2021, despite the impact of floods in Queensland and only slightly below the record 6.2 Mt of Q4 2021 despite there being two fewer days in the quarter.
- Between September 2021 and March 2022 gas use for east coast exports was running ahead of CSG production (with gas flows from the south). Exports peaked in November 2021with 33 cargoes and have declined to 29 cargoes in May. Over the period of rising domestic spot prices March, April and May, CSG production exceeded exports by 8.1 PJ.
- Gas power generation (GPG) output increased by 602 GWh qoq comprising 5.6% of total generation in Q1 and increased from Q4 2021 which was the lowest quarterly output since 2006. The higher GPG was mainly due to displacement of coal by gas as well as by renewables and hydro. The GPG share in NSW and Victoria was 3.7% and 2.0% respectively. The share in Queensland was 7.4% and in South Australia it was 24.6%. The share of GPG in South Australia continued to rise in March (24.8%), April (30.1%) and May (35.2%).
- Total east coast gas demand in Q1 (both export and domestic) was 471.8 PJ (up by 2.7 PJ qoq), while supply was 478.9 PJ (up by 3.8 PJ qoq), with a surplus of 7.1 PJ compared with a surplus of 6.0 PJ a year earlier. The surplus went into storage – mainly into Iona UGS. Gas in storage at the end of March was 81.6 PJ compared with the level in March 2021 of 101.9 PJ.
- In stark contrast to the tsunami of bad news and comment about the global and east coast energy crises, WA is an oasis of calm. While gas and electricity prices are edging up in WA, they are nothing like those on the east coast.
- The end-of-field-life challenges of the North West Shelf and the shutdown of Prelude throughout Q1 2022 were a major constraint on national gas production in the latest quarter. Total natural gas production in Q1 2022 was steady qoq at 1305.2 PJ, with a rise in domestic gas supply (+3.8 PJ) offsetting lower LNG production (-5.1 PJ).
- National oil production decreased to 9.3 MMbbl in Q1 2022, down from 11.2 MMbbl in Q4 2021 and 9.9 MMbbl in Q1 2021. Woodside’s Vincent/Greater Enfield project was the biggest contributor to the decline of almost 2 MMbbl in most recent quarter.
- National petroleum production decreased in Q1 2022 for the second consecutive quarter, reflecting pressure on output across all major commodities – gas and LNG, oil and liquids. Production in Q1 2022 totalled 259.5 MMboe, down 1.1% qoq. The latest quarter was also a decrease compared to 277.7 MMboe in Q4 2021 and a record 288.4 MMboe in Q3 2021. NWS regained its status as Australia’s largest petroleum project, as measured by production.
- Total Australian 2P gas reserves as of May 2022 including conventional gas, CSG and ethane are 105,780 PJ, an increase of 9,904 PJ since December 2020. On the east coast reserves decreased by 1,747 PJ (5%). On the west coast, reserves have increased by 11,650 PJ with Barossa in the Bonaparte Basin (+4,071 PJ), Scarborough in Carnarvon Basin (+11,337 PJ) and West Erregulla in the Perth Basin (+300 PJ).
The 159-page report also has 60 Tables and 76 Figures, providing the latest numbers on Australian energy in 2022.
Further infomation, including the brochure with full table of contents, can be obtained by clicking here.