Australianeeds a ‘plan B’ to secure gas for the eastern seaboard, says EnergyQuest

		THEAUSTRALIAN.COM.AU02:36 Victorian government approves first gas project in a decade

Victoria hasapproved its first gas extraction project in more than a decade despite thestate government’s push for renewable energy. The pipeline near the TwelveApostles will supply gas to local homes and businesses but won’t address apredicted shortfall. The Greens have slammed the decision to More

LNG natural gas being shipped out of Darwin.

·By COLIN PACKHAM

BUSINESS REPORTER

·12:00AM JUNE 11, 2024

·33 COMMENTS

Australiamust develop a so-called plan B to head off a looming gas shortfall because thehope that the market will be able to bolster supplies is not working, a widelywatched industry group has concluded.

TheAustralian Energy Market Operator in March said a gas shortfall could emerge assoon as next year and, although mitigating steps could be taken, a deep, structural deficit would bepresent in 2028.

Shortfallsof gas will heighten the threat of unreliable electricity supplies, while heavyindustries that rely on the fuel source and cannot switch to renewable sourcescould be shuttered, analysts say.

Thevarious warnings have stoked alarm among Australia’s energy industry and thefederal and state governments, and numerous potential solutions have beenmooted. But consultancy EnergyQuest said Australia must now settle on asolution as it could not afford to waste more time.

“Itis now clear that whatever we have been doing has not addressed the looming2028 shortfall. But now we have less than four years to find the answer,” EnergyQuestsaid.

“PlanA of letting the market work its way through, or waiting for the market andgovernments to realise they really need more gas has failed and we have run outof time.”

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EnergyQuestsaid Australia would likely have to use a combination of responses to mitigatethe country’s traditional supplies running dry.

Australia’sgas industry has said bolstering eastern seaboard supplies was the most logicalresponse to a steep drop-off in offshore gas from Victoria’s Bass Strait.

Underscoringthe dwindling supplies, EnergyQuest said production in the three months endedMarch 30 fell. East coast production decreased by 6.8PJ to 71.9 PJ, led lowerby the Gippsland Basin where production decreased by 24.8 per cent from theprevious three months.

EnergyQuestsaid production from the eastern seaboard’s traditional supplier was now down67 per cent in the past 18 months.

Manynew developments continue to struggle to secure regulatory licences, whilepotential new sources are opposed by some pockets of the community.

Tooffset the pressure some critics, such as the Greens, have said Australia’s LNGexports should be curtailed.

Australiais one of the world’s largest LNG exporters, supplying the energy needs of keyregional allies such as Japan and South Korea which would be left scrambling ifsupplies were curbed.

Australia’sLNG industry has said the eastern seaboard infrastructure would be unable tocope with transporting gas south from Queensland, and curtailing energy intoAsia would undermine regional security.

Still,soaring LNG exports have provided fodder for critics. EnergyQuest saidAustralia’s LNG industry has started 2024 strongly with a record March quarterproduction of 21.2 million tonnes, beating the previous best result of 20.5 Mtin Q1 2023.

Therecord was achieved despite steadily declining shipments from the North WestShelf and Darwin LNG, which is settling into a two-year stretch of zero exportsuntil Barossa is brought online towards the end of next year.

Whilecontroversial, Australia’s eastern states could also find itself a LNGimporter. Several developments are pushing proposals to import LNG into eitherNSW, Victoria or SA which could then be transported around to the easternstates.

Whileit would overcome supply concerns, critics insist importing gas will besignificantly more expensive than current supplies.

Higherprices would be problematic to Australia’s eastern seaboard even if householdswere not gas users. Gas is increasingly playing a backstop role to theelectricity grid of eastern states, with so-called gas peakers fired up to dispatchelectricity when there is insufficient renewable generation.

Australianhouseholds have been hit by sustained price increases in recent years.