APPEA: Gas producers responding to concerns over east coast supply
The Australian Petroleum Production & Exploration Association (APPEA) states that Australian gas producers are responding to east coast gas supply concerns, with a number of new supply contracts and projects having been announced.
APPEA Chief Executive Dr Malcolm Roberts stated that “industry acknowledges that the east coast gas market is tight and further supply is needed”.
“Recent announcements have confirmed that approximately another 64 PJ of gas will be delivered into the market – equivalent to 10% of total demand,” Roberts commented.
Roberts noted that “a dozen new gas contracts or new projects have been signed or announced” since March.
“Queensland is now virtually self-sufficient, with local production 20% higher in the last quarter than a year ago,” Roberts stated. “For the first time since November 2015, there is a net flow of gas south from Queensland.
“At the same time, the Gippsland Basin is sustaining record output. Nevertheless, we need to bring more supply to the market to put downward pressure on prices.”
Roberts pointed to the Australian Domestic Gas Supply Mechanism having “raised global concerns about sovereign risk in Australia”, and stated that governments should look to reduce the costs and risks of developing new gas supplies.
“Independent analysis shows that regulation can account for 30% of costs during the first eight years of a project,” he stated. “Reducing these costs during the exploration and early development stages – when businesses have no revenue – would help revive exploration and lower the industry costs, which are eventually passed through to customers.
“Governments should be very concerned that onshore exploration is at a 30-year low. It almost goes without saying that states must lift their political bans on developing local gas. New South Wales and Victoria are heavy users of gas but have blocked local projects.”