Gas – a declining industry

Last weekend Bruce Robertson was a guest speaker at a community meeting for landholders who will be impacted by the Hunter Gas Pipeline if it is built. He advocates that gas is a declining industry in Australia.

Australian Gas demand

• Demand for gas in Australia is down by 17% and the demand for gas for power generation is down by 43% (2014 – 2022). Gas power stations are too expensive to run continually compared with renewables.
• AMEO predicts gas demand in Australia will fall by 50% by 2030.
• As we transition to 100% renewables, we need gas peaking plants, but they use a small amount of gas. The Colongra gas peaking plant on the NSW Central Coast worked for .9% of 2021. When coal plants closed in 2022, it was considered a high use year, and still peaking plants only worked for 5-10% of the time.
• As more renewables come online gas peaking plants will run less.

Australian Gas Reserves

There is no shortage of gas in Australia. Unlike WA, not enough gas has been reserved for the east coast market – it’s exported under contracts or sold on the spot market for very high costs.

Since 2014 gas production in Australia has tripled. There is 8.5 years of approved and fully developed gas reserves in existing basins.

Global gas demand is down due to

• high prices
• low availability, especially in Asia
• the destruction of permanent demand in Europe
• Chinese demand down 20% as they get cheap gas piped from Russia
• Japan, one of Australia’s largest markets, has reduced gas imports from 2014 at an average of 3% per annum
• Japan and Korea are switching to nuclear to be in control of their energy
• Gas is too expensive for the growth markets of Pakistan, Bangladesh and India

Global Gas Supplies

Qatar, one of the world’s largest and most efficient gas producers, will increase gas production by 64% in 2025. Qatar is very good at extracting gas and they can do it cheaply because the new gas fields are close to shore. A global glut of gas in 2025/6 is expected to reduce gas prices and squeeze out other players.

Gas produced in the US is $4 per gigajoule while Australia’s east coast gas cartel complains about a $12 price cap.

Further reading

15 March 2023 – Wave of new LNG export plants threatens to knock gas prices Reuters

16 March 2023 – Renewables help slash gas demand over British winter, avoid £15bn in energy costs Renew Economy

17 March 2023 – Australia is facing gas shortages. We shouldn’t be here, but there is a way out. Curtailing the inefficient use of gas to heat our homes will help bridge the supply issue expected in 2027. The Guardian