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Costs of production may increase prices

Costs are likely to increase over time in all gas markets. As gas reserves deplete and fields approach their economic end of life, sustained production will require additional investment. Eventually, production must shift to more expensive sources of supply. For example, a number of LNG import terminals have been proposed for the east coast. Any gas supplied through such LNG import terminals could be more expensive than gas developed closer to demand centres. This is because international LNG prices are historically higher than domestic gas prices and because of the costs associated with converting gas to LNG, transporting it by sea then re-gassing it at port, before its onward transport by pipeline.