EnergyQuest has just released its December 2024 EnergyQuarterly report with comprehensive analysis and data for the September Quarter, 2024 together with comments and data of breaking news.
Cascading consequences
EnergyQuest recently completed a detailed month-by-month analysis of the east coast and Northern Territory gas markets, compared to previous annual versions. This gives insights into seasonal demand and the possible supply response.
EnergyQuest finds that future gas supply issues are even more acute when the seasonal winter peaks of Victoria and NSW are considered. These two states will be reliant on LNG imports within a few short years, or there simply won’t be enough gas supply to meet demand, and gas users will be unable to source gas at any price.
The key Victorian gas plant at Longford supplied 61% of the total south-east gas production in 2023/24.
Longford has already lost a third, or 346 TJ/d, of its peak capacity (winter 2022 at 1,046 TJ/d to 700 TJ/d post winter 2024), and a further loss of 375 TJ/d by 2028 is forecast by AEMO, for a total loss of 721 TJ/d. This is more than the current pipeline capacity of the pipeline from Queensland, and more than Iona’s storage withdrawal rate.
Investment in new gas supply and infrastructure is also challenged by government interventions aimed at capping gas prices. Without the high price signal, and with the threat of more market intervention by the government, investors in gas infrastructure face serious challenges in raising the capital required for infrastructure investments.
The approaching peak shorfalls are a result of the cascading consequences of not exploring, not investing in infrastructure, market interventions by government, investor risk aversion, green lawfare and persistent gas demand which is not decreasing faster than supply.
Key Statistics
- Total petroleum production was steady in Q3 2024 on a qoq basis, which was a better result than it may have been given the major impact of an outage at Ichthys on gas, condensate, and LPG production. Total petroleum production inched ahead by 0.5% (or 1.2 MMboe) qoq to 269.6 MMboe in Q3 2024. The problems at Ichthys weighed heavily on national production, with the INPEX-operated project contributing almost 8 MMboe less compared to Q3 2023. Fortunately, Shell’s liquids-rich Prelude project selected the right time to show its full potential. Prelude enjoyed a record quarter and consequently delivered an additional 7.6 MMboe qoq.
- Australia’s LNG industry performed solidly in Q3 2024 and lifted shipments from the three-year low experienced in Q2 2024. The exception to the trend was Ichthys. Nationally, the industry shipped 19.8 Mt in Q3 2024, up slightly from 19.6 Mt in Q2 2024 and 19.7 Mt in Q3 2023.
- EnergyQuest estimates LNG export revenue was steady at $15.95 billion in Q3 2024 compared to Q2 2024 (A$15.85 billion). Revenues in Q3 2024 were down $0.83 billion compared to Q3 2023 ($16.8 billion) with the major factor being a lower average price of $14.77/GJ in Q3 2024 compared to $15.50/GJ in Q3 2023.
- Conventional east coast gas production in Q3 2024 staged a qoq increase for the first time in more than two years. This much-needed reversal was largely due to the Otway Gas Project finally delivering on expectations and efforts by the Gippsland Basin Joint Venture to slow the decline of Bass Strait production. East coast production increased to 104.4 PJ in Q3 2024, up 10.0 PJ (+10.6%) compared to Q3 2023.
Information about the EnergyQuarterly is available by clicking here.