Oz Regulator Warns of Victoria Shortfall
The Australian Energy Markets Operator (AEMO) has warned of a looming shortfall in gas supply in the state of Victoria.
In a report published March 29, to the approval of the upstream lobby group Australian Petroleum Production and Exploration Association (APPEA), it found that without additional gas supply, there is a potential shortfall in meeting annual Victorian gas demand from 2022 and in meeting peak winter day demand in 2021.
"Producers have advised AEMO that by 2022: Gippsland annual production is forecast to reduce to 38% below the 2018 production forecast; maximum daily production capacity is forecast to reduce by 50% compared with the 2018 forecast; Port Campbell annual production is forecast to reduce by 68% from the 2018 forecast, due to some offshore fields ceasing production; and the maximum daily production capacity is forecast to reduce by 76%.
Furthermore gas supply from Victoria to South Australia and New South Wales is expected to reduce, thanks to the forecast decline in Victorian gas production. Supply to these states is expected to reduce more during winter, owing to inventory limitations on gas stored at the Iona storage site.
APPEA CEO Malcolm Roberts said: "As other official reports and the industry itself have been warning for many years, Victoria needs more local gas production – offshore and onshore. Today’s report highlights the urgent need to remove the moratoriums and bans that have killed onshore gas development in the state. Victoria now has the most expensive wholesale gas in the market and costs will only rise if the state is forced to use more gas from interstate sources."
He said however that governments can act to relieve the pressure on customers as the minister for Northern Australia announced A$24mn (US$18.4mn) in grants to accelerate the development of four onshore gas projects. "The four projects – from Armour Energy, Westside Corporation, Beach Energy and Tri-Star Fairfields – will supply an extra 12.4 petajoules (331mn m3) of new gas to the east coast market by 30 June 2020 and an extra 27.6 petajoules over five years. South Australia operates a similar program which is bringing forward new supply in that state," he said, adding that the projects will bring forward the delivery of gas into the east coast market.
Queensland has begun approving some upstream projects on the pre-condition that gas be only sold for the domestic Australian market.