Australian LNG sector could produce 130 million mt/year by 2035: ministerSunday, 04 November 2012 | 00:00
A next wave of LNG projects could lift Australia's total LNG capacity to as much as 130 million mt/year by 2035, Minister for Resources and Energy Martin Ferguson told the Second Australia Gas Conference in Sydney Friday. Seven major LNG projects currently under construction around Australia are expected to raise the nation's capacity from around 24 million mt/year to more than 80 million mt/year by 2017. The projects, worth more than A$175 billion ($182 billion), look set to make Australia the world's biggest producer of LNG, ahead of current leader Qatar's 77 million mt/year. "But this is nowhere near the end of the story," Ferguson told the conference. "Several other projects are in different stages of planning, including the Equus, Arrow and Browse projects. There are also a number of potential expansions to brownfield projects now under construction such as Gorgon, Wheatstone and Ichthys." Speaking to journalists outside the conference, Ferguson said "there was another A$100 billion there to be grabbed," in terms of additional investment in the Australian LNG sector. Ferguson attributed Australia's rapid increase in LNG production to a number of factors, including strong regional demand and continuing exploration - both offshore and onshore. That commitment has seen Australia's offshore resource base grow to 157 Tcf of conventional gas, sufficient for 100 years based on current demand. UNCONVENTIONAL GAS SECTOR HAS REALLY TAKEN OFF But it is the unconventional gas sector which has really taken off. "Australia now has economically demonstrated CSG reserves of about 33 Tcf," Ferguson said. "A less conservative estimate puts Australian CSG levels at more than 200 Tcf." Australia's production of coalseam gas reached 6.2 Bcm in 2010-2011 and it now accounts for about 11% of the nation's total output. About 97% of the total comes from Queensland, where coalseam gas accounts for around 90% of gas production. "With the industry having successfully operated in Queensland, it is now time for [its southern neighbor] New South Wales to address its looming gas supply shortages and develop its CSG industry," Ferguson said. "The New South Wales government is starting to act and has recently lifted a moratorium on the practice of fracking and put in place appropriate regulation for the sector, including restrictions on the use of toxic chemicals. It has also renewed a number of CSG exploration licenses and issued a new strategic land use policy for the sector." NSW Minister for Resources and Energy Chris Hartcher Thursday told the conference that his state was keen to develop both its domestic gas production industry and an LNG export industry based on its extensive coalseam gas resources. The NSW market is currently supplied 95% with imports from neighboring states, with just 5% coming from a coalseam gas project at Camden near the capital Sydney. But coalseam gas is by no means Australia's only unconventional source of gas, Ferguson said. "While these are early figures, Australia has an estimated 400 Tcf of recoverable shale gas and 20 Tcf of tight gas," the minister added. "Current exploration and production programs are expected to refine these figures. Australia will need greater levels of geological knowledge to achieve similar results to those in the [United] States but significant progress is already being made." In recent weeks Santos has started producing at Australia's first commercial shale gas well in the Cooper Basin. "Other shale exploration activities are also underway in Western Australia, the Northern Territory and Queensland," Ferguson said. "These campaigns will lead to a greater understanding of this resource, with the future for shale gas in this country looking very bright indeed." FACES CHALLENGE TO DELIVER PROJECTS ON TIME, WITHIN BUDGET But it's not all good news, and Australia's gas industry does face a challenge to deliver its projects on time and on budget, Ferguson said. "This will be critical to us remaining internationally competitive, particularly in light of challenges from existing gas exporters and emerging sources of LNG supply, such as Russia, East Africa and the United States." Several reports have found Australia is one of the highest-cost countries for developing major projects. "Skills and labor shortages have become a major impediment and include everyone from project designers and geologists to truck drivers and machine operators," Ferguson said. "The government is addressing this problem through the National Resources Sector Workforce Strategy [which] consists of 31 actions aimed at building the stock of skilled workers in this country. These include Enterprise Migration Agreements, which allow major projects to bring in overseas workers when the local labor market can't meet peak workforce demand." Earlier, the Australian Broadcasting Corporation reported that Chevron has struck an EMA to bring 150 foreign workers if needed at the Gorgon LNG project in Western Australia. Source: Platts
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