God save me from the AEMO:
The Australian Energy Market Operator’s (AEMO) latest analysis finds 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.
Published today, AEMO’s 2019 Gas Statement of Opportunities (GSOO)and Victorian Gas Planning Report (VGPR) highlight the need for further investment in existing reserves or alternative gas supply infrastructure developments, such as additional north to south pipeline capacity or gas import terminals, to reduce the risk of shortfalls.
“The immediate actions taken by industry and government in response to our 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,” said AEMO’s Chief System Design and Engineering Officer Dr Alex Wonhas.
“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,” said Dr Wonhas.
“While the 2019 GSOO is forecasting a short-term reduction in demand for gas-powered generation of electricity (GPG), unforeseen weather-related consumption or contingency events in the electricity market could result in an increased need for GPG, which risks depleting gas storage inventories and tightening the supply-demand balance further,” said Dr Wonhas.
“In Victoria, the continued reduction in gas production resulting from depleting reserves in offshore gas fields translates to a reduction in gas exports from Victoria to New South Wales, South Australia and Tasmania,” said Dr Wonhas.
“The VGPR echoes this analysis, forecasting that from winter 2023, supply of gas from Victoria for South Australia and New South Wales could be limited if a high demand winter day coincides with a significant amount of unplanned thermal generator outages,” said Dr Wonhas.
Absent of longer-term responses such as new commitments to develop existing reserves and contingent resources, increased pipeline capacity from Queensland, or further investment in alternative infrastructure development including gas storage and Liquified Natural Gas (LNG) import terminals, AEMO is projecting an overall gas supply shortfall from 2024.
The reports follow considerable engagement and consultation with Australia’s gas industry and provides a mid to long-term outlook for Australia’s gas sector. The GSOO specifically helps inform the Federal Government’s decision as to whether the Australian Domestic Gas Security Mechanism (ADGSM) needs to be triggered.
The analysis also notes the impact of the recently-operational Northern Gas Pipeline, which can deliver up to 90 terajoules (TJ) of gas daily from the Northern Territory to Queensland. This frees up capacity on the South West Queensland Pipeline (SWQP) for supply to the southern states. Despite this capacity increase, the capacities of the Moomba to Sydney Pipeline (MSP) and the Moomba to Adelaide Pipeline System (MAPS) are expected to reach a limit for southbound gas delivery.
Sack Dr Wonhas. The gas cartel has prices at $10-11Gj today with the Asian price at $6Gj. What does that tell us about the availability of gas today? If there was enough gas to benchmark the price properly, it would be at export net-back of $4.50Gj, delivering a $15-20bn income boost to households and business. That is within Australian Domestic Gas Security Mechanism (ADGSM) standing agreement which seems to have collapsed.
Gas needs its own regulator to toughen and police the ADGSM. The AEMO and ACCC are either completely captured or have absolutely no idea what they are doing.
