Natural Gas - South Australia’s NEMesis or opportunity?
Australia is a leading global LNG exporter with gas representing over half of Australia’s total exports, second only to iron ore, and is predicted to earn a jaw-dropping $282 billion this year.
Our large natural gas reserves are capable of sustaining production and exports throughout the 21st Century. Assessments indicate that Australia has around 144 trillion cubic feet of natural gas, well over 100 times annual domestic consumption. However, more than 90 per cent of these reserves are located offshore from northwest Western Australia and in the Timor Sea to the north.
Closer to home - in the north-east of South Australia, the Cooper Basin has been producing oil and gas for 50-years. This basin supplies the bulk of domestic eastern Australian gas markets and is an economic cornerstone for South Australia.
In 2013 the gas market was booming but a global commodity price crash resulted in escalating gas and electricity prices. Compounded by announcements of future domestic gas shortages gas export controls were introduced. This harmed the gas industry on multiple fronts and lost public trust.
This mistrust gave rise to anti-gas activism resulting in the imposition of a politically motivated moratorium in the south east.
In addition to the imposition of moratoria and gas reservation, in the past decade there have been 13 inquiries in Australia into environmental safety of the onshore gas industry, including hydraulic fracturing. These enquiries serve to create investment uncertainty and regulatory confusion. All inquiries concluded that the risks can be properly managed.
Amid negative gas sentiment, gas remains of critical importance to our electricity mix. Close to half of South Australia’s total electricity is generated from gas sources on our doorstep.
South Australia’s electricity market has more installed gas fired generation per capita than any other state in the National Energy Market (NEM). We also have the largest installed capacity of intermittent renewable generation – wind and solar – than any other region in the NEM. For South Australia, access to an affordable and a reliable source of gas – a natural complement to renewables - is vital.
Globally, the International Energy Agency expects natural gas to grow more than any other energy type by 2040 to a market share of more than 25% of all global energy demand. Gas will also play a key role in the decarbonisation of our future.
State and Federal governments have a conflicting narrative - on the one hand implementing schemes to incentivise gas exploration, on the other, imposing moratoria and gas reservation policies. However, progress is being made at a federal level, where the gas security mechanism imposed in 2017 is now ear marked for review.
The gas industry continues to support the view that a focus on increasing supply is more beneficial than market interventions. What is needed now and into the future is access to new gas supply sources.
Today Australia has approximately 70 years of supply from identified resources. If prospective resources were developed there would be enough gas for many hundreds of years.
South Australia’s gas pipeline infrastructure is now 50 years old and requires significant investment in maintenance, upgrades or in some cases replacement for ongoing efficiency. Renewing gas pipeline infrastructure and improving capacity will help to alleviate high gas prices and enable new gas supply. However, these long-term investment decisions, require policy certainty.
As we celebrate the 50-year anniversary of safely and sustainably delivering natural gas to Adelaide; and South Australia’s leading position as a net exporter of energy; natural gas remains a key component in our transition to a low carbon economy.
Ends.
Media contact: Rebecca Knol, CEO; 0409 012 007
An abridged version of this column was published in The Advertiser on Saturday 16 November 2019.
Our large natural gas reserves are capable of sustaining production and exports throughout the 21st Century. Assessments indicate that Australia has around 144 trillion cubic feet of natural gas, well over 100 times annual domestic consumption. However, more than 90 per cent of these reserves are located offshore from northwest Western Australia and in the Timor Sea to the north.
Closer to home - in the north-east of South Australia, the Cooper Basin has been producing oil and gas for 50-years. This basin supplies the bulk of domestic eastern Australian gas markets and is an economic cornerstone for South Australia.
In 2013 the gas market was booming but a global commodity price crash resulted in escalating gas and electricity prices. Compounded by announcements of future domestic gas shortages gas export controls were introduced. This harmed the gas industry on multiple fronts and lost public trust.
This mistrust gave rise to anti-gas activism resulting in the imposition of a politically motivated moratorium in the south east.
In addition to the imposition of moratoria and gas reservation, in the past decade there have been 13 inquiries in Australia into environmental safety of the onshore gas industry, including hydraulic fracturing. These enquiries serve to create investment uncertainty and regulatory confusion. All inquiries concluded that the risks can be properly managed.
Amid negative gas sentiment, gas remains of critical importance to our electricity mix. Close to half of South Australia’s total electricity is generated from gas sources on our doorstep.
South Australia’s electricity market has more installed gas fired generation per capita than any other state in the National Energy Market (NEM). We also have the largest installed capacity of intermittent renewable generation – wind and solar – than any other region in the NEM. For South Australia, access to an affordable and a reliable source of gas – a natural complement to renewables - is vital.
Globally, the International Energy Agency expects natural gas to grow more than any other energy type by 2040 to a market share of more than 25% of all global energy demand. Gas will also play a key role in the decarbonisation of our future.
State and Federal governments have a conflicting narrative - on the one hand implementing schemes to incentivise gas exploration, on the other, imposing moratoria and gas reservation policies. However, progress is being made at a federal level, where the gas security mechanism imposed in 2017 is now ear marked for review.
The gas industry continues to support the view that a focus on increasing supply is more beneficial than market interventions. What is needed now and into the future is access to new gas supply sources.
Today Australia has approximately 70 years of supply from identified resources. If prospective resources were developed there would be enough gas for many hundreds of years.
South Australia’s gas pipeline infrastructure is now 50 years old and requires significant investment in maintenance, upgrades or in some cases replacement for ongoing efficiency. Renewing gas pipeline infrastructure and improving capacity will help to alleviate high gas prices and enable new gas supply. However, these long-term investment decisions, require policy certainty.
As we celebrate the 50-year anniversary of safely and sustainably delivering natural gas to Adelaide; and South Australia’s leading position as a net exporter of energy; natural gas remains a key component in our transition to a low carbon economy.
Ends.
Media contact: Rebecca Knol, CEO; 0409 012 007
An abridged version of this column was published in The Advertiser on Saturday 16 November 2019.