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But Jemena Managing Director Frank Tudor said an attempt to lower prices through government intervention was an ultimately short-term and short-sighted solution to current issues.
“As a result of misaligned policies across state boundaries – which have seen gas reserves locked up in some states – and energy policy uncertainty at the federal level, Australia’s east coast domestic gas prices have more than trebled,” he said.
“This makes east coast gas some of the most expensive in the world.
Jemena Managing Director Frank Tudor.
“Remedying this situation relies not on further reform but rather a fundamental shift in our country’s gas supply versus demand equation.
“Simply put, if Australian gas prices are to return to acceptable levels additional gas must be brought to market.”
Mr Tudor said both industry and consumers needed an environment that encouraged new investment in gas and facilitated the unlocking of new supplies.
“Freezing investment, by introducing further regulatory uncertainty, will only serve to increase the price of gas over the long term,” he said.
“As appealing as greater regulatory reform may appear, in the long term this will only serve to drive up gas prices.”
The energy analyst reported LNG exports in the 2019 financial year had continued to increase, with the total export revenue over the 12-month period estimated to be $50.5 billion.
Australia exported a total of 1,111 cargoes and 75.1 million t of LNG in FY19, a 21.2 per cent rise from FY18’s 61.7 million t, which was good enough to fall just behind Qatar’s 77 million t as the world’s top LNG exporter.
EnergyQuest expects production over the current year to increase again to 80 million t, which should see Australia assume the top spot.
This increase will be fuelled by a ramp up in production of INPEX’s Ichthys LNG Project and Shell’s Prelude Floating LNG development, the latter of which exported its first LNG cargo in June.
Australia’s biggest customer over the year was Japan, which accounted for 41 per cent of the nation’s exports, while China and South Korea followed with 37 per cent and 10 per cent of exports respectively.
Japan is the biggest market for west coast exports, while China is Queensland’s biggest customer.
Lattice has been granted authority from the Victorian Government’s Earth Resources Regulation to advance its Enterprise Project, located near Port Campbell off Victoria’s southwest coast.
The project involves drilling deep under the ocean floor via a technique known as extended reach drilling, which avoids any impact on the marine environment and begins from the land onshore.
Lattice has successfully used the technique previously at a nearby site and has produced gas there since 2016.
Earth Resources Regulation will monitor the project’s progress and ensure its safety and environmental standards are met, while the development is expected to attract at least $50 million in investment.
Earth Resources Regulation Executive Director Anthony Hurst said the approval would help move the project further along.
“Lattice Energy can now proceed to seek final approvals and continue to engage closely with the local community to keep them updated with on-site activities,” he said.
“We will ensure that Lattice Energy fulfils its regulatory obligations to protect people and the environment.”
Additionally, the company has formally lodged an Environment Protection and Biodiversity Conservation (EPBC) Act referral for the pipeline, which would transport gas from Galilee Energy’s Glenaras Gas Project in Central Queensland to the east coast domestic market.
Galilee is currently undertaking commissioning activities at Glenaras, having drilled three lateral wells for its pilot program this year.
Galilee had budgeted $8 million for the lateral drilling campaign and anticipates three months of production drawdown will be required in order for material gas production rates from the wells to be observed.
Jemena General Manager Strategy and Business Development David Green said the submissions reflected the confidence the company had in the Glenaras project.
“The encouraging early results from this pilot are a credit to the Galilee Energy team,” he said.
Galilee Managing Director Peter Lansom said project was moving forward with the team working hard to bring the Glenaras wells online as soon as possible.
“I would like to congratulate Jemena on their outstanding progress on the Galilee Gas Pipeline,” he said.
“This is further evidence that Galilee is moving at pace to achieve its objective of supplying material gas volumes into the east coast gas market.”
Front end engineering and design work on both the pipeline and gas field are targeted to begin later this year, with an objective of first gas to market in 2020.
Galilee is 100 per cent owner of the Glenaras project.
The WA State Government released an implementation plan outlining its proposed actions in response to the findings of the independent scientific panel inquiry into hydraulic fracture stimulation.
The plan, which can be accessed online, was developed by a Senior Officials Steering Group co-chaired by WA’s Department of Water and Environmental Regulation (DWER) and Department of Mines, Industry Regulation and Safety (DMIRS).
The steering group will action specific government policy decisions, including obtaining consent from Traditional Owners and private landowners before stimulation takes place; maintaining the existing ban in specified regions; banning hydraulic fracturing in national parks and other iconic natural heritage areas; referring proposals to the Environmental Protection Authority (EPA); and strengthening regulations to ensure high health, safety and environmental protection standards are met.
“DWER is committed to protecting the state’s water resources and environment to enable thriving communities and a strong economy,” said DWER Director General Mike Rowe.
“The implementation plan includes a number of safeguards such as the referral of all onshore exploration and production applications for hydraulic fracturing to the EPA for assessment.
“The plan also prohibits hydraulic fracturing within 2,000 m of gazetted public drinking water source areas.”
DMIRS Director General David Smith said WA has robust resource regulations and that he is confident the plan will reinforce this strong regulatory framework.
“The state has a long history of safe and responsible oil and gas operations, and the steering group will work hard to maintain this world-class approach,” said Mr Smith.
“We are delighted to add another industrial user of gas to our customer portfolio under a multiyear supply agreement.”
All offshore construction operations on the Sole field have been completed, with production wells now successfully connected to the Orbost plant.
APA Group is currently completing the project’s onshore operations to upgrade the gas plant to process gas from Sole, and Cooper said it is anticipated the facility will be ready in the September quarter of this year.
Located in the Gippsland Basin, the Sole gas field is being developed to supply approximately 24 PJ/a to the market, with more than 75 per cent of its reserves already contracted to a range of utility and industrial customers.
“Gas does not set the price of electricity across the national energy market in Australia,” said APPEA Chief Executive Andrew McConville.
“There are many reasons why Australia has electricity affordability issues, including that wholesale and retail markets are too concentrated; poorly designed regulation and policy have added significant costs to electricity bills.
“Prices for new supply have risen as a result of rising production costs and supply restriction caused by the impact of bans and moratoriums in southern states.”
Mr McConville said IEFFA included misleading information in the report about Australia’s gas prices compared to other countries, citing a recent survey by the International Gas Union (IGU) which found Australia paid below the average amount in comparison to Asia.
Additionally, Mr McConville said Australia needed to follow the leads of countries like Canada and the US where the gas markets set wholesale prices, rather than enact a gas reservation policy.
“These nations do this for a good reason; gas reservation actually makes worse the situation it’s supposed to fix,” he said.
“A domestic gas reservation policy would act as an implicit tax on Australian gas production that diminishes incentives to invest in future gas production and exploration.
“The best way to create downward pressure on gas prices is more gas, not more regulation.”
“West Australians get access to gas that is cheaper than on the east coast of Australia and any opportunities to ensure there are lower gas prices on the east coast of Australia we will investigate,” he said.
“There was work done previously looking at infrastructure between the east and west coast.”
“People have talked about LNG import terminals. There are a whole lot of ideas that have been talked about in order to bring some of that west coast gas to the east coast.”
Jemena Executive General Manager of Gas Markets Antoon Boey said the pipeline should be commissioned before the end of the year.
“We are currently in the early stages of construction, with around 90 people on site conducting clear and grade and stringing activities, and we expect this work to ramp up quickly over the coming weeks,” he said.
Mr Boey said Jemena would continue to invest in infrastructure to bring new gas supply to Australia’s east coast market.
Senex Managing Director and CEO Ian Davies said the pipeline would be deliver gas that is “much-needed”.
The pipeline will be 8 inches (203 mm) in diameter, buried at a depth of 1,200 to 2,000 mm and will have the capacity to transport 40 TJ of gas per day.
During the lifecycle of the project, almost 200 jobs will be created.
AGL said it now expected first gas from the Victorian project to be delivered in the second half of the 2022 financial year, an extension from its original goal of FY2021.
The company intends to moor a floating storage and regasification unit (FSRU) at the Crib Point Jetty south of Melbourne and connect it to the existing gas network via a new pipeline to be constructed by APA Group.
The project is currently undergoing an environmental examination at the state level and will require both state and federal approval to proceed, with AGL expecting an outcome from these assessments to occur no earlier than late FY20.
Due to the delays, AGL has changed its selection for the project’s FSRU from the Hoegh Giant to the Hoegh Esperanza, citing the latter vessels later delivery window and more suitable timing and operational requirements.
If the project proceeds, AGL has said between 12 and 40 LNG ships per year would moor alongside the FSRU to resupply the vessel.