East Coast Gas Outlook to 2040: Keeping the Lights On

The rise of COVID-19 and the outcome of the OPEC+ meeting on 5-6 March have seen one of the biggest disruptions the gas industry has ever seen.

What is the outlook for the gas industry in these turbulent times?

How does a company manage supply and market risk in this volatility?

What do Boards and senior managers need to know, before they make a decision?

What are the opportunities for the agile participant?

Or simply, how can a company plan for the best and prepare for the worst?

This is a challenging situation for the gas industry, producers, pipeline operators, buyers and governments. This report provides a comprehensive update of the long-term demand and supply outlook, based on an additional two years of data since our 2018 report. It also takes a close look at the outlook for the next couple of years in the light of the likely investment constraints companies will face.

Some of the major conclusions of the report are:

  • The next couple of years   are likely to be characterised by economic disruption, uncertain energy demand and lower prices, both domestically and internationally and spending cuts for energy producers.   This will create opportunities for energy buyers but challenges for producers.
  • Over the medium-term (to 2030) supply constraints will become increasingly evident with the decline of production offshore Victoria and absence of major new gas discoveries. Any developments onshore Victoria or NSW will provide some supply increments but are unlikely to materially shift the long-term demand-supply imbalance. We expect one and possibly two of the Gladstone LNG trains to be closed as increased gas volumes are diverted from the LNG projects to the domestic market. The gap between demand and supply will also increasingly rely on LNG imports at international prices.
  • As we get into the 2030s the east coast LNG contracts will begin to tail-off. At the same time, as the closure of coal-fired power generation accelerates, the demand for natural gas to back-up renewables could be increasing is likely to grow.

Some of the specific issues considered are:   

  • What is the impact of Arrow Surat Basin development?
  • What is the Narrabri production outlook and what if it is not developed?
  • What is the potential for gas development in NSW generally?
  • Will termination of the Victorian conventional drilling moratorium make a difference?
  • Which LNG import projects are likely to be developed and within what time frame and how will they change the market?
  • How robust are proven and probable reserves estimates to meet demand?
  • What are the likely 20-year production profiles for major fields and basins?
  • What are the expected development costs for major fields and projects?
  • What is future gas demand for the domestic market, and the LNG export projects?
  • What is the gas price outlook for the east coast?
  • What are the risks and game changers for the industry?

These findings are available as a confidential multi-client report. You can download further details here: