The aim of this paper is to present an overview of the Australian natural gas sector and outline some recent important developments. It also expands on and updates earlier work by the Parliamentary Library on this topic.
The paper looks at characteristics of natural gas, units of measurement, Australia’s gas reserves and resources, the coal seam gas sector, industry gas pipeline developments, natural gas consumption incorporating supply, demand and export projections, natural gas prices, industry gas pipeline developments, and environmental issues and contains a summary of recent regulatory issues.
Australia has limited crude oil but is relatively well endowed with natural gas resources. The natural gas industry has shown remarkable growth—both the domestic and export sectors—over the last few decades and this is projected to continue. The bulk of Australia’s gas resources are located long distances from the eastern Australian markets. These are offshore northwest Western Australia (Carnarvon and Browse basins) and in the Timor Sea to the north of Australia (Bonaparte Basin). Because of the uneven distribution of our gas resources it had been thought that gas would need to be piped from these fields when the closer smaller eastern fields run down prior to 2020.
The above scenario is now less likely with the development of newer gas fields in the Gippsland, Bass and Otway Basins located offshore in southern Victoria. Furthermore, there has been rapid development of coal seam gas reserves in Queensland and New South Wales with the potential to become a major source of gas for eastern Australia.
The natural gas export sector is presently supplied from the North West Shelf and Bayu-Undan, Darwin. Additional export volumes are expected from the North West Shelf in late 2008 and thereafter from a number of new ventures including Greater Gorgon, Pluto, Pilbara LNG, and Browse Gas all in Western Australia, and coal seam gas field developments in Queensland and New South Wales.
A recurring question in natural resource use and development is: why export a commodity with an important domestic use, especially with gas exports projected to increase to around 60 per cent of production by 2020. The answer invariably relates to economics and the adequacy of the resource base to provide for domestic use into the foreseeable future.
Natural gas as an energy source has significant environmental benefits over both coal and oil in terms of lower greenhouse gas and other emissions. This aspect will be of considerable advantage in the further promotion of natural gas use and Australia’s energy future. Natural gas remains a cheap energy source in Australia when compared to the United States and Europe. However, wholesale gas prices have generally trended upwards in the last few years, especially in Western Australia.
Implementation of newer gas regulatory processes has been protracted although considerable progress has been made in recent times. The present Gas Code will be replaced with the National Gas Law and National Gas Rules. Regulation will be simplified with a single Australian Energy Regulator.