EnergyQuarterly September 2022: Please coal, don’t go just yet

EnergyQuest has just released its September 2022 EnergyQuarterly  report with comprehensive analysis and data for the June Quarter, 2022 together with many statistics for July and into August. 

  • There seem to be energy crises all around the world at present, driven by freak weather, the Ukraine war, COVID and botched decarbonisation. Global gas prices have outrun oil on an energy-equivalent basis. We take a close look at what is happening to prices, internationally and domestically. With energy prices at eye-watering levels around the world, we believe that Western Australia now has the lowest gas prices in the OECD. WEM electricity prices are also much lower than those in the NEM.
  • East coast wholesale spot electricity prices spiked, to an unprecedented average of $284/MWh in Q2, more than triple the Q2 2021 average of $85/MWh, driven by coal outages, higher international prices for coal and gas and fuel supply disruptions due to flooding.
  • As a result demand for gas for power generation increased by 29%, pushing up prices. The ABS Producer Price Index for east coast gas, which also reflects contract prices, jumped by 51.8% in Q2 compared with a year previously. Santos’ east coast domestic gas price in Q2 2022 was $9.24/GJ, 33.0% higher qoq. Prices realised by other companies on the east coast were around $6.40-8.70/GJ – lower than the Santos’ price. STTM prices reached astronomical levels in Q2 with increases ranging from 233.4% in Wallumbilla to 299.3% in Melbourne.
  • The best way to reduce pressure on gas prices is to keep coal generation online until renewables catch up.
  • This report take a deep dive into the latest ACCC Gas Inquiry Report, taking a detailed look at some of their numbers, particularly some of the claims about volumes of uncontracted gas exported. One of the myths of east coast gas is that there are large volumes of gas being exported, over and above long-term contracts, and these could be diverted domestically to meet all excess demand without upsetting Australia’s trading partners. We cannot see the evidence. The other myth is that east coast gas is super profitable. Most of the companies would walk if they could get their money back.
  • Total east coast gas demand in Q2 (both export and domestic) was 508.5 PJ (down by 1.1 PJ qoq), while supply was 496.9 PJ (down by 1.7 PJ qoq), with a deficit of 11.6 PJ compared with a deficit of 11.0 PJ a year earlier. The deficit was met by withdrawals from storage.
  • Average Australian LNG prices in Q2 2022 were $17.88/GJ more than twice the level of $8.58/GJ in Q2 2021.
  • EnergyQuest estimates Australia exported a record 82.6 Mt of LNG in the 12 months to 30 June 2022, well up on the 77.3 Mt in FY 2021 and beating the previous record set in FY 2020 of 79.3 Mt.
  • Australian conventional gas production increased significantly in Q2 2022 thanks to the best result from the Gippsland Basin Joint Venture (GBJV) in almost five years and soaring production from the domestic gas trains at Gorgon and the NWS.
  • Gas production by the east coast LNG industry decreased in Q2 2022 to its lowest level in more than three years, but production remained slightly ahead of exports.

The 167-page report also has 77 Tables and 71 charts, providing the latest numbers on Australian energy in 2022.

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