The Australian Energy Market Operator (AEMO) forecasts an improved outlook for gas supply until at least 2026 across the eastern and south-eastern gas systems, if committed field developments and pipeline expansions proceeded as planned, with operation of the Port Kembla Gas Terminal (PKGT) commencing before the 2023 winter.
AEMO’s Gas Statement of Opportunities (GSOO) highlighted southern supply risks for winter 2023 if PKGT is delayed and certain conditions emerge, such as a 1-in-20 maximum winter daily demand in Victoria, coincident peaks across southern regions, power-system events significantly increasing gas-powered generation of electricity (GPG), or gas production outages.
AEMO group manager, forecasting, Nicola Falcon, said the announcement of the Port Kembla Gas Terminal, Australia’s first LNG import terminal, has improved supply capacity with an estimated injection of up to 500 terajoules per day.
“This development comes at a critical time, as existing Victorian production is declining faster than previously projected,” Ms Falcon said.
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“Our annual analysis shows that without the Port Kembla Gas Terminal, the decline in flexible gas from existing fields would mean we need to rely heavily on storage, and increasingly on constrained pipeline infrastructure to meet the needs of gas consumers, especially during high demand days in winter,” she said.
AEMO’s GSOO – developed using reserve and forecast information from gas producers and industrial gas users – also highlights that the gas sector is on the cusp of transformation, with changes in consumption patterns forecast and alternate supply sources being actively developed.
“Australia’s energy sector is going through a rapid transition, driven by changes in consumer behaviour and efforts to decarbonise the system,” Ms Falcon said.
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“This report recognises the potential of electrification, fuel switching to hydrogen, the Australian Government’s vision for a gas-fired recovery and LNG imports to all influence investment opportunities in the gas sector.
“Investments to address forecast supply gaps in the second half of this decade need to consider the transformation underway and be adaptable to manage changes in gas consumption.
“There are a number of initiatives at both Commonwealth and state government levels that could change the market and impact the outlook described in the report, including proposals to drive more gas into the system,” she said.
The National Gas Infrastructure Plan (NGIP) being developed by the Federal Department of Industry, Science, Energy and Resources (DISER) is considering a number of pathways to unlock gas supply and improve efficiency in the east coast gas market.
Minister for Energy and Emissions Reduction Angus Taylor said the Government is committed to a gas-fired recovery that will see Australian gas working for all Australians.
“We have been taking action to help secure the gas supplies that are vital to our economic recovery to avoid potential shortfalls and price hikes,” Minister Taylor said.
“The supply of reliable, affordable gas will keep downward pressure on energy prices and the lights on for Australian businesses and households.
“Gas will be even more important as Australia continues to be a world-leader in the renewables sector, with one in four Australian households having solar installed.”
Climate Council senior researcher Tim Baxter said, “The Morrison Government’s ‘gas-fired recovery’ fantasy is just that, an expensive, dangerous, and unnecessary fantasy.
“There will be no shortfall, and in the electricity sector, gas is already being out-competed by clean, affordable renewable energy. In the next few years, electrification and efficiency will also lead to a decline in gas use in other areas such as manufacturing and industry.”