Australia’s EMO says gas shortfall averted until 2030

Running against the tide of earlier opinions, the Australian Energy Market Operator (AEMO) has declared that the forecast domestic gas shortfall for Australia’s east coast predicted last year has been averted.

The AEMO – a body established in July 2009 with membership made up of Australian government representatives and industry participants – has just released its 2018 gas outlook report. It found that a commitment from producers to increase domestic gas supplies following federal government threats to forcibly reduce export levels will hold off gas shortages until at least 2030.

The report said the government action, combined with less use of gas-fired electric power stations, new pipeline interconnections, and a short-term oversupply of LNG in the Asia-Pacific region which reduced demand for Australian gas exports had averted the potential crisis. AEMO said there are no gas supply gaps forecast in 2019 or in the short term, under expected conditions.

David Swift, AEMO’s head of planning and forecasting, said there is now more gas available than previously forecast. He added that LNG producers will be able to input as much as eight petajoules more than previously expected into the domestic market.

Late last year the Australian Competition and Consumer Commission forecast gas shortages of 55-108 petajoules if more domestic supplies were not secured immediately. Victoria was thought to face the worst shortages from 2021 onwards unless new gas supplies could be found.

AEMO said a boom in renewable energy generation may further reduce domestic gas demand.

“With over 4,000 Mw of wind and solar [power] coming online in the next two years, our forecasts show that gas-powered generation demand could be even lower than projected in our last year (2017) forecasts, as the role of gas transitions to focus more on meeting demand when renewable generation is low,” AEMO said.

Nevertheless, gas will still be an important source of back-up power.

“An increased need for gas due to weather-related or contingency events could still adversely impact this forecast and tighten the supply balance once again.

AEMO did forecast that new gas infrastructure will need to be built from 2030 to continue to meet the ongoing demand on the Australian east coast.

It remains to be seen how much credence is placed in this more optimistic gas picture and whether the timetables for proposed new infrastructure such as the establishment of LNG import terminals in Victoria and New South Wales by 2020-21 will remain in place.

Source: Oil & Gas Journal