A taste of the gas pricing future to come? RC and we CTP holders...

A taste of the gas pricing future to come? RC and we CTP holders certainly hope so…

http://www.copyright link/business/energy/gas/soaring-gas-prices-trigger-fears-of-tasmaniastyle-energy-crisis-20160629-gpv46w

It’s paywalled, but salient points are as follows:

- Soaring east coast gas prices due to the cold snap and rising demand from the Queensland LNG projects have triggered fears among manufacturers about a Tasmanian-style energy crisis that would lead to losses.

- Wholesale gas prices in Sydney for Thursday reached almost $29 a gigajoule, about 60 per cent higher than their peak in 2012.

- The spike means industrial gas buyers relying on the short-term market for part of their supplies will be paying more than three times as much as Japan is paying for importing LNG.

- Ben Eade, executive director of Manufacturing Australia, said the combined impact of the cold and the fifth LNG train starting up in Gladstone was placing "significant pressure" on short-term domestic gas markets, just as gas buyers had been warning.
- Last Friday saw the first cold weather-driven demand "event", as termed by the Australian Energy Market Operator, when the spot gas price in Victoria exceeded $20 a gigajoule for a four-hour period. Prices spiked on Wednesday in Brisbane, reaching $11.95, while prices in Adelaide recently touched $18.99.

- Brickworks had only been able to lock in gas supplies to the end of 2017. "No one will write you a contract beyond 2018 at any price, so that makes things very concerning," he said.

- As recently as October 2014, before the start-up of LNG exports from Queensland, wholesale prices were trading at near-zero, and some of the LNG ventures were selling gas at a loss or burning it off as waste. Since then, the $27 billion Queensland Curtis LNG project built by BG Group has started up both its trains, as has Santos's $25 billion GLNG project. Origin Energy has started one of the two trains at its Australia Pacific LNG project, with the second to come online later this year. The ventures are causing a tripling of gas demand in the eastern states over a two-year period.
- The head of the APPEA oil and gas industry group Malcolm Roberts noted that nearly all gas traded on the east coast was under long-term contracts, giving certainty about prices and volumes. He said the spot market usually accounts for only 1-2 per cent of gas traded daily and tends to be volatile, with Sydney prices ranging from $7.61-$28.81 over the past week, while prices in Queensland have been $9-$12.

-  Conventional gas fields will begin to decline as early as 2017.

- One large gas user needed to purchase a significant volume on the spot market in July, and based on the latest prices in Brisbane would need to pay over $15 a gigajoule.

- Council of Australian Governments energy council needs to seriously consider the impact of rising gas prices on domestic industry at its upcoming meeting in July and to act quickly to implement the recommendations of the Australian Competition and Consumer Commission from its east coast gas inquiry.