Australia’s Gas markets
BREE Workshop, November 2014
Ross Lambie
Gas Market Manager
Bureau of Resources and Energy Economics (BREE)
bree.gov.au
2014 Gas Market Report
̶
Overview of Australia’s natural gas
resources and markets
̶
Development of Australia’s natural
gas industry
̶
Cost competitiveness: a key
challenge to Australia’s LNG sector
̶
Global LNG outlook
̶
Review of the economic impact of
the CSG industry in Queensland
̶
Note on the economics of domestic
gas reservation policy
bree.gov.au
Potentially lots of gas…
bree.gov.au
Three distinct and separate gas markets…
Western – largest market, incl. LNG
exports, 1,551 PJ
Northern – smallest market, 26 PJ
Northern
Gas
Market
Western
Gas
Market
Eastern – largest domestic market, 854 PJ
Eastern
Gas
Market
Development strongly influenced by:
̶
Remoteness of gas supply basins
̶
Concentrated energy demand around
population centres
̶
Relatively low domestic demand
bree.gov.au
Strong growth in production and use over
the last 45 years
̶
Little value, no clear
commercialisation pathway focus on oil
̶
Few industrial users,
replacement for manufactured
town gas
̶
Growth in large industrial users,
demand from residential and
commercial customers
̶
Value-adding LNG export
opportunities – linking domestic
markets to international markets
bree.gov.au
Supply is changing…
Cooper conventional
Bowen-Surat CSG
bree.gov.au
and so is domestic demand…
Electricity generation
Manufacturing
Mining
bree.gov.au
…and LNG exports
Pluto train 1
(4.3 Mtpa)
NWS train 5
(4.4 Mtpa)
Darwin LNG
train 1
(3.7 Mtpa)
NWS train 4
(4.4 Mtpa)
NWS trains
1, 2 & 3
(7.5 Mtpa)
This didn’t ‘just
happen’
bree.gov.au
Australia must remain cost competitive
Ichthys
QLD CSG
LNG
NWS 1-3
Darwin
LNG
bree.gov.au
LNG delivered cost to Japan
Australian projects
Gorgon
Ichthys
APLNG
Sabine Pass
bree.gov.au
Asian demand has dominated LNG growth
Australia’s supply
response has
been relatively
modest
bree.gov.au
Things are about to change…
Major sources of growth in LNG export capacity
‘The coming of the
second wave’
bree.gov.au
With significant potential for more
supply…
LNG supply capacity
Australia becoming
number one this decade.
The location of new
supply will then depend
on where it is least costly.
bree.gov.au
But, new supply will depend on LNG
demand…
Growth in Asian demand
looks promising over the
medium term…
particularly for China and
India
bree.gov.au
And forecasting LNG demand is fraught
with uncertainty…
Depends on many
factors:
China’s natural gas supply and demand balance
̶
Natural gas share of energy
demand
̶
Relative costs of alternative
energy
̶
LNG share of natural gas
(indigenous gas and
pipeline imports)
̶
Geopolitical factors
̶
The role of
unconventional gas
bree.gov.au
Unconventional gas is also an issue for
Australian LNG supply… social licence
http://www.lngworldnews.com
bree.gov.au
Need to understand the coal seam gas
industry’s impacts
Source: Rolfe et al. 2011
bree.gov.au
We are beginning to…
 First part of BREE’s CSG study reviews the projected and actual
economic impacts of CSG on Queensland
 Key findings:
̶
A clear positive net benefit to Queensland through increased
economic output, employment, household income, royalties and
regional population ̶ broadly consistent with forecasts
̶
Detailed analysis of cumulative impacts would have been useful
in the early stages of development
̶
Distribution of net benefits and costs important - considered in the
second part of the study
bree.gov.au
With opportunity comes challenges…
 The eastern market’s transition to LNG exporting ̶ the domestic
market is changing
̶
higher wholesale gas prices
̶
supply concerns
 Implications of potential policy responses need to be understood
̶
Domestic gas reservation policy
bree.gov.au
Thank you
Ross.Lambie@industry.gov.au
bree.gov.au