Australia is facing a tightening window to develop new gas supplies to the East Coast according to the primary findings of the Offshore South East Australia Future Gas Supply Study, part of the Australian Government’s $90 million investment in gas security and supply.
Gas supply from offshore south east Australia is expected to continue at close to current levels over the next five years before declining over the medium term, reducing the capacity of the gas industry to rapidly respond to unanticipated increases in peak winter demand.
Opportunities to increase supply in the short term are limited. All major known gas fields in the region have been developed and are significantly depleted, so maintaining supplies will require new gas discoveries, and accessing lower volume, deeper and lower-quality gas fields at a higher cost.
Minister for Resources and Northern Australia Senator Matt Canavan said the study showed that the offshore south-east basins have up to 3.8 trillion standard cubic feet of known gas reserves, about 8-9 years supply.
A further 3.7 trillion cubic feet of contingent resources have the potential to extend production beyond this, but will require substantial investment to overcome infrastructure and technical constraints.
“Without further discoveries and development, gas supply from offshore south east Australia is expected to continue at slightly below current levels over the short term (1–5 years), and then decline over the medium term,” Minister Canavan said.
“Although there is potential to increase production in four of the six gas plants in Victoria, which would increase competition and put downward pressure on prices, the only way to increase reliable and affordable gas supplies is to identify new onshore and offshore gas resources.”
“There is an opportunity to deliver more gas through increased exploration, but the offshore gas is expected to come in more slowly because the fields are smaller and deeper with more impurities.”
“Victoria’s decision to ban onshore gas exploration means they are becoming increasingly reliant on offshore gas. This is a risky strategy. They are gambling with the future of Victorian manufacturing.”
The study also found that any increase in gas supply from existing projects in the short term will only result in a faster erosion of reserves, with implications for long term security of supply.
“We need to find greater supplies both offshore and onshore. Given it takes five to ten years to get gas from discovery to production we need to move now,” Minister Canavan said.
To ensure future gas needs are met the Government is actively considering policy options to get more gas to eastern Australian consumers, power suppliers and industry.
“As well as introducing measures like the Australian Domestic Gas Security Mechanism to ensure that Australian users have access to gas at a reasonable price, we will continue to support gas exploration and development onshore and offshore,” Minister Canavan said.
“Measures like the $28.7 million package to accelerate the responsible development of onshore gas will make grants available to states and territories that are prepared to lift bans and moratoriums, supporting projects that are capable of delivering gas to the East Coast market within the next three years.”
The Offshore South East Australia Future Gas Supply Study was prepared by the Department of Industry, Innovation and Science, with major contributions from the National Offshore Petroleum Titles Administrator (NOPTA) and Geoscience Australia, and in consultation with the Victorian, South Australian and Tasmanian state governments.