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Bree.gov.au Australia’s Gas markets Ross Lambie Gas Market Manager Bureau of Resources and Energy Economics (BREE) BREE Workshop, November 2014.

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Presentation on theme: "Bree.gov.au Australia’s Gas markets Ross Lambie Gas Market Manager Bureau of Resources and Energy Economics (BREE) BREE Workshop, November 2014."— Presentation transcript:

1 bree.gov.au Australia’s Gas markets Ross Lambie Gas Market Manager Bureau of Resources and Energy Economics (BREE) BREE Workshop, November 2014

2 bree.gov.au 2014 Gas Market Report ̶Overview of Australia’s natural gas resources and markets ̶Development of Australia’s natural gas industry ̶Cost competitiveness: a key challenge to Australia’s LNG sector ̶Global LNG outlook ̶Review of the economic impact of the CSG industry in Queensland ̶Note on the economics of domestic gas reservation policy

3 bree.gov.au Potentially lots of gas…

4 bree.gov.au Three distinct and separate gas markets… Western – largest market, incl. LNG exports, 1,551 PJ Northern – smallest market, 26 PJ Eastern – largest domestic market, 854 PJ Development strongly influenced by: ̶Remoteness of gas supply basins ̶Concentrated energy demand around population centres ̶Relatively low domestic demand Western Gas Market Northern Gas Market Eastern Gas Market

5 bree.gov.au Strong growth in production and use over the last 45 years ̶ Little value, no clear commercialisation pathway - focus on oil ̶ Few industrial users, replacement for manufactured town gas ̶ Growth in large industrial users, demand from residential and commercial customers ̶ Value-adding LNG export opportunities – linking domestic markets to international markets

6 bree.gov.au Supply is changing… Cooper conventional Bowen-Surat CSG

7 bree.gov.au and so is domestic demand… Electricity generation Manufacturing Mining

8 bree.gov.au …and LNG exports Pluto train 1 (4.3 Mtpa) NWS train 5 (4.4 Mtpa) Darwin LNG train 1 (3.7 Mtpa) NWS train 4 (4.4 Mtpa) NWS trains 1, 2 & 3 (7.5 Mtpa) This didn’t ‘just happen’

9 bree.gov.au Australia must remain cost competitive NWS 1-3 Darwin LNG QLD CSG LNG Ichthys

10 bree.gov.au LNG delivered cost to Japan Sabine Pass Gorgon Ichthys APLNG Australian projects

11 bree.gov.au Asian demand has dominated LNG growth Australia’s supply response has been relatively modest

12 bree.gov.au Things are about to change… Major sources of growth in LNG export capacity ‘The coming of the second wave’

13 bree.gov.au With significant potential for more supply… LNG supply capacity Australia becoming number one this decade. The location of new supply will then depend on where it is least costly.

14 bree.gov.au But, new supply will depend on LNG demand… Growth in Asian demand looks promising over the medium term… particularly for China and India

15 bree.gov.au And forecasting LNG demand is fraught with uncertainty… China’s natural gas supply and demand balance Depends on many factors: ̶Natural gas share of energy demand ̶Relative costs of alternative energy ̶LNG share of natural gas (indigenous gas and pipeline imports) ̶Geopolitical factors ̶The role of unconventional gas

16 bree.gov.au Unconventional gas is also an issue for Australian LNG supply… social licence

17 bree.gov.au Need to understand the coal seam gas industry’s impacts Source: Rolfe et al. 2011

18 bree.gov.au We are beginning to…  First part of BREE’s CSG study reviews the projected and actual economic impacts of CSG on Queensland  Key findings: ̶ A clear positive net benefit to Queensland through increased economic output, employment, household income, royalties and regional population ̶ broadly consistent with forecasts ̶ Detailed analysis of cumulative impacts would have been useful in the early stages of development ̶ Distribution of net benefits and costs important - considered in the second part of the study

19 bree.gov.au With opportunity comes challenges…  The eastern market’s transition to LNG exporting ̶ the domestic market is changing ̶ higher wholesale gas prices ̶ supply concerns  Implications of potential policy responses need to be understood ̶ Domestic gas reservation policy

20 bree.gov.au Thank you


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