EnergyQuest has just released its annual east coast gas projections to 2040: East Coast Gas Outlook 2022, Navigating the Storm.
When EnergyQuest published the East Coast Gas Outlook 2021 report last year, we saw the industry as ‘Balanced on the Edge’ with great uncertainty – now the industry is “Navigating the Storm” with the simultaneous impacts of under-investment in the industry, the Ukraine war, freak weather, COVID and botched decarbonisation. The International Energy Agency has described this as the “worst global energy crisis in history”.
Some of the major conclusions are:
- Queensland is forecast to be largely self-sufficient in gas supply, even with the three LNG export projects at Gladstone, until around 2032 when the CSG fields begin to decline and limit LNG feedstock gas.
- It is an industry adage that the best cure for high gas prices is high gas prices. This seems to have been the case since last year, with Gippsland and Otway Basins showing a much-improved production outlook, which has pushed back the need, at least on an annual volume basis, for LNG imports.
- Victorian gas supply is forecast to offset the decline of the legacy basins (Gippsland, Cooper and Otway) until 2027, with the critical supply from Narrabri and LNG imports starting in 2028. This is a temporary reprieve only. Fundamentals of supply, especially in the southern states, are not being addressed. Exploration is not replacing reserves. The need for imports into NSW remains high, even with potential production from Narrabri. Manufacturing is at highest risk in NSW.
- LNG imports are expected to supply half of the Southern Region by 2034.
- Delivered domestic gas prices in 2030 are expected to be significantly higher than in our last report, 27% higher in Adelaide, 32% in Sydney, 42% in Melbourne and 48% at Wallumbilla.
- EnergyQuest expects Australian carbon pricing to reach European levels by the early 2030s, adding approximately $8/GJ (2022 A$) to gas prices, an increase of at least 50% to the above gas price outlook without an explicit carbon price.
- The level of exploration expenditure onshore has remained depressed since 2015 , reducing the chances of new exploration discoveries to add to the east coast gas resource base but the Beetaloo Sub-basin has reinforced its position as the top-ranked play on the basis of recent appraisal results.
The report includes a detailed reconciliation with the 2021 report. There are some significant differences based on production over the last year. Higher prices are stimulating higher production. The new report is 305 pages, up from 244 pages last year, with 72 tables and 156 charts.
Information about the EnergyQuest East Coast Gas Outlook 2022 report is available by clicking here.