Tuesday, 11 December 2012 09:34
A lack of uncommitted available reserves coupled with the demand for Australia's liquefied natural gas (LNG) could create challenges for domestic gas supplies by 2016.
A new report by the Australian Energy Market Operator (AEMO) has found eastern and south-eastern Australia have sufficient gas resources to meet demand over the next two decades.
But it hinges on the gas industry developing reserves in a timely fashion to meet growing demand from the domestic and LNG export markets.
The AEMO's Gas Statement of Opportunities found gas fields currently in production were reaching the end of their economic life, with existing long-term domestic gas supply contracts nearing expiry and LNG exports expected to start in 2014.
The projected increase in LNG exports from Australia will require gas reserves of between 43,000 petajoules and 53,000pj.
If development stalls, there will be potential supply shortfalls for the export and domestic markets seen towards the end of the period of increasing LNG demand in 2016, the report said.
AEMO chief executive Matt Zema said the volume of uncommitted available reserves, combined with a large proportion of reserves committed or earmarked for LNG projects was a future challenge domestically.
"Forecast domestic gas demand for a number of proposed large industrial projects currently exceeds the capacity of the pipelines to supply gas in Gladstone, Queensland from 2013," Mr Zema said.
"Competition for gas supply may impact the timing or scope of these proposed projects."
It also highlighted the emergence of a secondary LNG export market, primarily driven by international gas prices rather than domestic production and transmission costs, having a significant impact on the domestic market.
Coal seam gas and other shale or tight gas reserves would be developed for domestic use as conventional resources were depleted or committed to export markets, the report found.
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