EnergyQuarterly Report – March 2024

EnergyQuest has just released its March 2024 EnergyQuarterly report with comprehensive analysis and data for the December Quarter, 2023 together with comments and data of breaking news.

Exploration: the fading frontier

Australia’s petroleum production peaked in 2022, and decreased by 18 million barrels of oil equivalent (MMboe) in 2023.

One clear reason why Australian production is in decline, is that exploration for new resources is at diabolically low levels. With a few key exceptions, the frontier spirit of exploration in Australia is fading away – too risky, not welcome, too expensive, unrewarded by investors and some argue not even needed. 
For this Quarterly’s focus on exploration, we take a deep dive into the state of play for exploration in Australia.

Producing greener low-carbon products is picking up pace globally, but we note a lesson from the Nickel industry that securing a green-premium from buyers is very hard to realise, despite higher costs. 

Green hydrogen is struggling with increased costs which are up 35% to 60%. This increases the cost of green hydrogen to four times the Hydrogen Strategy target of $2/Kg.

Santos had a victory in the courts in favour of the Barossa project, but the cost and delays serve to increase the risk premium for doing business in Australia.

The two NT LNG projects came to the rescue when Blacktip gas supply decline continued. They supplied 25% of NT’s domestic gas in the December 2023 quarter.

In Australia the energy market is short, and muddling by – but for how long? We look more closely at how the market is balanced and what impact LNG imports, storage and batteries may have.

Key Statistics

  • Australia’s run of annual production records, off the back of the LNG investment boom, came to an end in 2023. Total national petroleum production decreased from 1,096 million barrels of oil equivalent (MMboe) in 2022 to 1,078 MMboe in 2023, marking the first annual decrease since 2013 when production was less than half of current levels. 
  • An eight-year run of national LNG production records ended in 2023, with total shipments of 80.7 million tonnes (Mt) falling slightly short of the 81.2 Mt shipped in 2022. National production increased every year from 30.2 Mt in 2015 to 81.2 Mt in 2022 as seven mega-projects of Australia’s LNG investment boom came online, beginning with QCLNG in 2015 and ending with Prelude in 2019.
  • East coast conventional gas production was down 18.4% qoq. This represents the lowest December quarter production in EnergyQuest’s data series, which began in 2002. The decline was led by a sharp fall in output from the Gippsland Basin Joint Venture. 
  • Domestic gas spot prices in WA were 46.1% higher Q4 qoq at $9.19/GJ. The WA spot price has been on a downward trend since June 2023 but remains well above historical levels. Santos’ west coast gas price was 17.3% higher qoq to $7.72/GJ – a record high for Santos. Woodside’s average WA domestic gas price in Q4 was $6.80/GJ, up 28.3% from a year before. By contrast, short-term east coast gas prices averaged $10.77/GJ in Q4, 39.6% lower qoq. 
  • Oil continued to shrink with total production for 2023 declining by 20.5% compared to 2022, to only 31.2 million barrels. National production has halved since 2016 and is only one-third of the level of 2011. 

Information about the EnergyQuarterly is available by clicking here.