Gas shortages? We haven’t seen the worst yet

Comment by Peter Roberts

Australia’s rush to develop LNG exports is not looking such a smart move with shortages likely extending to the consumer field.

While manufacturers have long struggled with high prices and an inability to secure long term gas contracts, the sector has been unable to win the argument against indiscriminate LNG export from three gas export plants built at Gladstone in Queensland.

However when consumers suffer, and there is evidence they are about to, things may change.

AGL is planning to spend $250 million building the country’s first gas import facility on Westernport Bay in Victoria.

The construction of an import facility so close to Australia’s largest offshore petroleum resource in Bass Strait is causing consumers to question why Australia, one of the world’s largest gas exporters, is buying the stuff back from overseas.

The building of three LNG terminals in Gladstone was predicated on gas extracted from the east coast gas network being replaced by onshore gas from new projects such as fracking.

That hasn’t worked out because of local opposition to coal seam gas’s environmental impact, and now even the LNG terminals are reportedly running short of gas.

A new report from energy analysts, EnergyQuesty, forecasts gas shortages feeding Gladstone within seven years.

Exports could be cut by a third at LNG export facilities as a result, according to their predictions which reach out to 2036.

It all seems rather ominous for gas supplies and gas prices which have already tripled since 2012, according to figures form the Australian Energy regulator.

Whereas gas prices were around $3.00 per gigajoule in 2012, they are closer to $12.00 today.

It is hard to imagine politicians in Canberra being able to convince anyone that energy markets are under control when these looming shortages bite.

Perhaps then manufacturing will get some attention, and some surety of gas supply.

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