AEMO: Further gas investment needed

ACCC, EUAA, gas prices, gas pipelines, GSOO

The Australian Energy Market Operator (AEMO) has released its 2019 Gas Statement of Opportunities (GSOO) and Victorian Gas Planning Report (VGPR), highlighting the fact further investment in existing reserves or alternative gas supply infrastructure is needed.

This could include an additional north to south pipeline or gas import terminals to reduce the risk of shortfalls.

The GSOO reveals that supply from existing and committed gas developments is expected to provide sufficient resources to meet demand in southern and south-eastern Australia until 2023.

However, additional sources of gas supply are required to address a forecast gap in meeting long-term winter gas demand from 2024.

Victorian producers, which produce most of the gas for southern Australia, continue to forecast declining production as offshore gas fields are depleting.

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AEMO’s chief system design and engineering officer Dr Alex Wonhas said the immediate actions taken by industry and government in response to AEMO’s 2017 and 2018 GSOO and VGPR reports have delivered an improved outlook for the east coast gas markets, alleviating concerns of a supply shortfall in the short term.

“However, southern Australia’s overall supply-demand balance for 2021-2023 remains very finely balanced, reflecting the ever-tightening integration of Australia’s electricity and gas markets in the context of an evolving and dynamic energy system,” Dr Wonhas said.

The Energy Users Association of Australia said the GSOO highlights “the perilous situation facing Australian gas users”.

“The 2019 GSOO identifies the potential for significant shortfalls in gas supply and comes after recent warnings from gas market analysts Energy Quest, that we are facing critical gas shortages in the coming years – potentially dire shortfalls in 3-5 years as no new reserves are available,” EUAA CEO Andrew Richards said.

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“We remain gravely concerned about the lack of future gas supply and the impact that LNG exports are having on the cost and availability of reasonable contracts for Australian gas users.”

Australian Petroleum Production & Exploration Association director of economics Damian Dwyer said with exploration at record low levels, this analysis reinforces how vital it is for all governments to support developing new gas supplies as quickly and as cheaply as possible.

“This requires a focus from the newly re-elected NSW government to support the development of its identified onshore gas resources and ease regulatory burdens to developing that new supply, and for the Victorian government to urgently remove the bans and moratoriums in that state,” Mr Dwyer said. 

Read AEMO’s GSOO here.