More gas diversions are coming and it’ll hurt foreign investment in Aussie oil and gas
This is in contrast to a forecast by the Australia Energy Market Operator’s 2018 Gas Statement of Opportunities which forecast no East Coast shortages before 2030. Wood Mackenzie expects East Coast gas prices to be in the $8.50/GJ (gigajoule) to $11/GJ range. Oil at $US70-80 will keep LNG prices elevated and therefore gas prices as well. Furthermore, the Asian LNG market is expected to tighten from 2012, notwithstanding increasing supply becoming available from Qatar, the US, PNG and Africa. This will help to drive prices higher in Australia, with contracts forecast to nudge up to $10.70/GJ and $12.70/GJ by 2025. “From 2026, with more expensive gas from Queensland setting the marginal price and limited pipeline capacity to enable flows south, prices would rise further and LNG imports become economic, and effectively set a ceiling for gas prices in the winter,” Mr Browne said. In contrast, gas prices in West Australia continue to fall, with Woodside’s average realised North West Shelf domestic gas price hitting $4.13/GJ in the second quarter. The region’s gas surfeit is set to be worsened as the Wheatstone project starts up. Record production is still not enough Australian petroleum production hit record highs in June or 870.4 MMboe (million barrels of oil equivalent). It’s expected to touch 1 Bboe next year. Yet the Queensland LNG projects are still operating below capacity because they don’t have enough gas, says the CEO of energy consultancy EnergyQuest, Graeme Bethune. One one LNG cargo was shipped from Gladstone in August and capacity utilisation across the three projects at Gladstone is “uncommercially low” at an average 77 per cent in the second quarter. Queensland gas sent south wasn’t able to offset declines in production in Victoria.