The Geopolitics of Australian
Natural Gas Development
Ronald D. Ripple, PhD
Mervin Bovaird Professor of Energy Business and Finance
Master of Energy Business Program
School of Finance, Operations Management, and
International Business
University of Tulsa
32nd USAEE/IAEE North American Conference
Anchorage, Alaska
28-31 July 2013
Outline
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Australia’s geopolitical role is that of an exporter
of natural gas in the form of LNG.
Australia’s role in the LNG trade; export trade
partners.
Australia’s natural gas resource base.
Australia’s LNG projects.
Australia’s trade advantages and disadvantages.
Australia’s challenges: potential of US LNG
exports.
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75% increase in Australian
exports: NWS expansion
and Darwin LNG start-up
China trade began in 2006
World trade increased 75%
Asia trade increased 69%
Japan trade increased 40%
Source: BP’s Statistical Review of
World Energy, 2012 & 2006
Australia’s
Natural Gas
Proved Reserves
and Production,
1980-2011
[BP Statistical Review
of World Energy, June
2012]
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Production supports exports and domestic use
2011: Australian production ~51 bcm, split roughly evenly
between domestic and export use country-wide
2011: WA production was split roughly 2/3 – 1/3
export/domestic
Australia’s Natural Gas Resource Base
Source: Santos, Cooper Basin Unconventional Gas Opportunities & Commercialisation, Nov 2012.
Source: EIA – World Shale Gas Resources: An Initial Assessment, April 2011.
Source: EIA – World Shale Gas Resources: An Initial Assessment, April 2011.
Australian LNG projects: Operating Under
Construction and Planned (capacities – mtpa)
Source: LNG Business Review, February 2012.
Australian LNG Projects
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Three operating projects with total annual capacity at
24.2 mt.
Seven projects under construction with total
additional annual capacity of 61.5 mt.
The 61.5 mtpa represents about $190 billion in
investment from a range of international and
domestic parties.
The 61.5 mtpa represents 64.5% of all new capacity
currently under construction world-wide.
Sometime prior to 2020, Australia will surpass the 77
mtpa of Qatar.
Australian LNG Advantage
proximity to dynamic and growing Asian markets
LNG Carrier shipping cost (only) comparison between Australia and Qatar
3
140,000 m tanker => ~ 2,995,000 MMBtu
Destination - Tokyo [accounts for round trip travel time]
Port
Darwin
Doha
Days - hours
Cost @$125,000/d
Cost/MMBtu
Dist (nautical miles) 14 knots 20 knots 14 knots
20 knots
14 knots
20 knots
3072
8d 19h
6d 10h $ 2,197,917 $ 1,604,167 $
0.73 $
0.54
6655
19d 10h 13d 21h $ 4,854,167 $ 3,468,750 $
1.62 $
1.16
Difference (Australia advantage)
$
0.89 $
0.62
Australia LNG Disadvantage
Source: recent CME research into the cost of doing business, CME WA.
Australia’s US LNG Export Challenge?
 US
natural gas resource base – shale gas
revolution
 US natural gas export approvals
 Expected size of the Asia-Pacific LNG trade
 US LNG shipping distances
Expected size of the Asia Market
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BP’s Outlook to 2030 projects Asia consumption from
all sources to increase by 60%, relative to 2011, while
Asia production is projected to increase by 52%.
This will result in a gap, which is expected to
continue to grow, of 159.2 mt equivalent in 2020.
LNG capacity under construction in 2013 equals 95.3
mtpa, which includes the 61.5 mtpa in Australia and
the 9.0 mtpa Cheniere Sabine Pass project in the US.
US – Tokyo shipping distances
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Through the Panama Canal (once the expansion is
complete) = 9,247 nautical miles.
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More than 3 times the Australian distances.
Around South Africa = 15,957 nautical miles.
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More than 5 times the Australian distances.
Conclusion
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Australia has played an important geopolitical role in
the growth of the natural gas trade in LNG.
Australia will continue to play an important role,
especially as it expands to be the largest LNG
exporter.
Australia will face competition, even in traditional
markets, but the market is also expected to grow
substantially.
Thank you for your attention.
I am happy to answer questions?
Prof Ronald D Ripple
Email: ron-ripple@utulsa.edu
Phone: 918-631-3659