Overseas sales pose risk to local supply

The planned launch of a series of gas export projects in Queensland means NSW and Queensland face gas shortages within five years.

The planned launch of a series of gas export projects in Queensland means NSW and Queensland face gas shortages within five years.

That forecast, by the Australian Energy Markets Operator, the body that manages the energy market, comes as gas prices are set to skyrocket because of the east coast exports.

The forecast shortages also come amid concerns over allowing coal seam gas mining in NSW and Victoria, which could ease shortfalls.

The export projects will consume up to 250 terrajoules a day of gas in Queensland and about 50 to 100 terrajoules of gas redirected from NSW by 2019.

The looming shortages in NSW could be dealt with by upgrades to pipelines that would enable more gas to travel from Bass Strait to NSW or by tapping gas locked in coal seams, the report said.

As well, with the Otway Basin off Victoria's west coast likely to be exhausted in a little over a decade, this would put further pressure on future supplies, the report warned.

Coal seam gas from Gunnedah, in north-west NSW or the Cooper Basin in South Australia/Queensland or the Surat Basin in Queensland could supply NSW in future years. Queensland gas exports will rise to about 1450 petajoules by 2020, which is more than 10 times existing annual gas demand in NSW.

AEMO said domestic demand was projected to grow at just 0.9 per cent a year from about 620 petajoules a year to about 750 petajoules a year by 2033. This takes into account a likely fall in gas for power generation because of higher gas prices, lower electricity demand and likely lower carbon prices.

NSW was facing potential shortfalls of 50 to 100 terajoules a day during the winter demand peak from 2018, the report warned.

The expected shortfalls in NSW could be tackled by new sources of supply from the Cooper Basin, which could be piped from Moomba, in South Australia's north, or by upgrading the Eastern Gas Pipeline from Victoria, establishing gas storage in Newcastle and tapping gas in the Gloucester and Gunnedah basins, the report noted.

More recently, upgrades to gas pipelines from Bass Strait have been flagged as debate continues about tapping coal seam gas in NSW.

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