paul balfe - acil allen consulting - overview of the gas market
DESCRIPTION
Paul Balfe delivered the presentation at 2014 Gas Compressor Stations Conference. The Gas Compressor Stations Conference is the only conference specifically dedicated to the design, build and maintenance of gas compressor stations. For more information about the event, please visit: http://www.informa.com.au/gascompressors14TRANSCRIPT
Gas Supply & Demand Outlook for
Eastern Australia
Gas Compressor Stations ConferenceStamford Plaza, Brisbane
Paul Balfe
Executive Director
29 April 2014
Key Messages1. LNG exports are transforming the Eastern
Australia gas market– Tripling total gas demand while domestic demand outlook
is depressed
2. The ramp up of demand for LNG will put great pressure on current supply sources– Creating opportunities for new conventional sources, CSG
and other “unconventional” gas: shale gas, tight gas
3. Gas prices are already rising to about triple historical levels
4. High levels of ongoing activity in CSG drilling and associated field services
Gas Compressor Stations Conference Slide 2
Domestic gas demand
outlook, by sector
Gas Compressor Stations Conference Slide 3
Source: ACIL Allen modelling
Why is domestic gas
demand collapsing?
• A Perfect Storm:
– Competing demand from LNG Projects• Driving rising gas prices
– Manufacturing industry declining• Strong A$; declining competitiveness
• Manufacturing closures affect direct gas demand and indirect gas demand (via electricity)
– NEM electricity demand falling• With gas-fired electricity generation most heavily affected
– C-tax low to zero; rising gas prices; low electricity pool prices; black & brown coal running hard (no Contract for Closure); RET-driven renewables keep coming in
• No new entrant base load plant before 2020
Gas Compressor Stations Conference Slide 4
Projected NEM generation mix
Black coal53.2%
Brown coal24.0%
Hydro8.7%
Natural gas12.0%
Solar0.0%
Wind2.1%
2013
Black coal56.9%
Brown coal23.1%
Hydro7.8%
Natural gas3.8%
Solar0.2%
Wind8.3%
20202013 2020
Gas Compressor Stations Conference Slide 5
Source: ACIL Allen modelling
But TOTAL EA gas demand
is growing strongly …
• LNG exports will see total gas consumption in EA more than triple by 2030
Gas Compressor Stations Conference 6
Source: ACIL Allen modelling
EA gas production history
Gas Compressor Stations Conference
Source: ACIL Allen analysis of APPEA data
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
NSW CSG 1 1 1 2 2 3 4.5 5.1 5.5 4.8 5.9 5.8 5.9
Qld GSG 5.6 9.5 16.2 27.4 29.5 36.4 63.2 86.2 125.1 150.9 212.0 233.5 268.7
Otway/Bass 21.7 17.4 24.4 23.8 16.2 52.2 76.0 85.3 129.5 136.7 129.9 126.7 121.2
Bowen/Surat 22.5 22.5 23.1 24.9 26.7 25.7 28.2 46.4 52.7 9.7 14.8 10.7 3.2
Amadeus 19.0 18.1 18.8 19.4 18.4 20.5 20.4 30.1 19.7 18.7 3.1 1.8 4.2
Gippsland 182.3 222.6 213.5 223.7 259.9 241.8 238.2 289.6 290.3 224.3 239.5 235.5 262.4
Cooper/Eromanga 277.5 278.2 276.7 258.5 209.3 200.6 174.7 135.0 139.0 137.9 115.4 116.1 119.7
0
100
200
300
400
500
600
700
800
900
Pro
du
cti
on
(P
J)
7
Where will new gas come
from?• Conventional:
– Bass Strait (Gippsland, Otway, Bass Basins)• eg Kipper/Tuna/Turrum; Halladale/Blackwatch; Rockhopper
• CSG– Queensland: best of the resource is LNG committed; marginal
production economics???
– NSW: major resources but little recent progress – bogged down with policy/approvals issues and public opposition to development
• Missed the boat?
• “Unconventional” (Shale gas, tight gas)– For EA most promising is Cooper Basin tight/shale gas
• Encouraging technical results
• Large in situ resource established– Some “wet gas”
• Early commercialisation under way (eg Moomba 191)
• Cost structure/economics?? No cheap gas without associated liquids
Gas Compressor Stations Conference Slide 8
Brisbane
Gladstone
Moranbah
Townsville
Newcastle
Sydney
Hobart
Melbourne
Adelaide
Mount Isa
Bowen CSG
Surat CSG
Gunnedah CSG
Sydney CSG
Ballera
Iona
Lang LangLongford
Orbost
WallumbillaMoomba
Gladstone CSG
LNG plantsQueensland
New South Wales
South Australia
Victoria
Tasmania
Northern Territory
Gas prices now reflect
market interconnection• Previously separated
geographic markets now interconnected
• Producers have options where they sell
• Producers will seek the best prices for their products
• Price trends are reflected throughout the interconnected market
Gas Compressor Stations Conference 9
Wholesale gas prices:
rising throughout EA
Energy Networks 2014
AEMO data
Slide 10
Will CSG LNG projects be
short of supply?
Gas Compressor Stations Conference
ACIL Allen analysis based on Santos 2013 Reserves Statement
Slide 11
Future gas price risk
Gas Compressor Stations Conference
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
Indicative wholesale gas
price $/GJBase Supply
Low Supply
High Supply
No spike
Long-term settlement prices: indicative only
Will a “price bubble” emerge? How high? How long?
Slide 12
CSG drilling requirements
Gas Compressor Stations Conference
The CSG LNG Projects will require a high level of on-going
drilling and associated field services
Slide 13
ACIL Tasman, 2011: Titan Energy Prospectus
Gas Supply & Demand Outlook for
Eastern Australia
Gas Compressor Stations ConferenceStamford Plaza, Brisbane
Paul Balfe
Executive Director
29 April 2014