East Coast Gas Outlook 2023

EnergyQuest has released its fifth annual analysis of the east coast gas industry.

The outlook for the east coast gas industry is one of great uncertainty. The potential for large swings from balanced supply/demand, to tight supply, to the long term possibility of over supply foretells an industry roller coaster ride ahead.

  • Detailed bottom-up analysis of the domestic gas supply situation. It is clear that the legacy fields in Gippsland, as well as the Otway and Cooper Basins are in decline. 
  • considers where new indigenous gas might come from to replace this gas. Exploration expenditure is at some of the lowest levels seen, so apart from the distant Beetaloo in the Northern Territory, and a few wells in new plays, the prospect of adding material gas in the short term is low.
  • Even with the long term decline in gas demand by as much as 60% to 2042, the Base Case supply profile is not expected to meet demand beginning from 2028 without LNG imports to the east coast – or aggressively diverting LNG foundation contract feedstock gas.
  • This causes stress in the supply/demand profiles, which is particularly difficult in the southern states. In the Base Case, NSW becomes entirely dependent on gas from LNG imports and the currently unsanctioned Narrabri field. Victoria has an even more difficult time, with up to 91% of its gas demand to be met from LNG imports in 2034. This drives gas prices up to LNG import levels.
  • Then from 2036, the remaining coal seam gas in Queensland, which is no longer required to meet lapsed foundation LNG contracts, could be diverted to the southern states. This is a new profile not examined before by EnergyQuest, but is based on the experience of government market intervention in 2022. 
  • With aggressive policy settings, it may be possible to drive the market into oversupply. This would force gas prices lower, and potentially strand assets (pipelines, storage, LNG import terminals) which were developed for a gas-short market, as the industry roller coaster pivots to a new low point at speed. 
  • Also included in this year’s Outlook is an analysis of gas production carbon content by field and carbon pricing, as we head to the net zero carbon objectives.

At 314 pages of analysis, the report reviews in detail each of the gas reserves/resources on the east coast and Northern Territory, matches it with the expected demand to 2042, and calculates the price outlook for this period. The analysis is supported with an Excel file with 48 worksheets of detailed models and data.