With the penny dropping, and little else for central to spend...

With the penny dropping, and little else for central to spend for delivery of gas to eastern states "calamitous" shortage of gas through Jemena's soon to be built pipeline, central should start to look more attractive as mid 2018 approached. Will we need to wait 2 years for positive action to be observed in share price, very unlikely as positioning may have already commenced.
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Australia’s east coast is facing a “calamitous” shortage of gas that threatens to destroy Australian jobs “forever”, one of the nation’s top oil and gas analysts warns.

The ominous diagnosis from Credit Suisse’s Mark Samter came as the latest data from the Australian Bureau of Statistics showed a drop in oil and gas exploration, with spending falling to its lowest level in a decade.

Mr Samter said the weak financial position of many of the east coast’s biggest gas companies, the high cost of developing new gas reserves and recent policy decisions meant there would be a shortfall of supply that could force industrial gas users to shut down.

“It can’t be emphasised enough in our minds that this demand has a real impact on the real world,” Mr Samter said. “If you close a manufacturing plant … that demand and those jobs are gone forever.”

Mr Samter’s analysis of the supply and demand outlook for the eastern Australian gas market found there would be a significant shortfall of supply by 2019 and 2020.

He could not see any viable way that gas suppliers alone could fix the looming gas supply shortfall without the demand side taking the brunt of the pain.

“Sadly we really needed action three to four years ago to fix the mess,” he said. “It seems unavoidable now that serious pain will have to be felt by many parties.”

Yesterday’s data release by the ABS showed a 30.8 per cent plunge in spending on petroleum exploration during the June quarter to $295.3 million, the lowest figure since March 2006.

Spending on onshore exploration in Queensland fell to just $23.5m, the lowest since March 2008.

The figure means exploration spending in the state has fallen more than 90 per cent since it peaked at $290 million in December 2014.

The fall in oil prices in recent years has hurt the economics of Australia’s liquefied natural gas projects, given the prices they receive for their LNG are broadly linked to the oil price. The price fall has come at a particularly tough time for the companies behind the three LNG plants in Queensland.

The big coal seam gas fields that supply those plants have also proved less prolific than first thought, leaving less excess gas available for the domestic market and contributing to a rise in domestic gas prices.

Mr Samter said that while there was no shortage of gas on the ground in eastern Australia, there was a clear shortage of gas that was economically viable to develop today and which was in the hands of owners with the money to fund their development.

http://www.theaustralian.com.au/bus...n/news-story/7d177d2c3977da6742741a7fd23e0144