Gas is projected to play a critical role as Australia shifts from a heavy reliance on oil and coal to increased use of “friendlier” alternatives, Core Collaborative chief executive Paul Taliangis told delegates.
Major growth areas are projected to be gas-powered electricity generation and industrial applications such as mineral processing.
“The next 10 years promise to be among the most challenging and exciting since the foundation of Australia’s gas industry,” he said.
“The industry must respond to a range of major forces including growing demand, increased competition from new entrants and integrated energy companies, increased cost structures, new technology and critical environmental issues such as climate change.”
More than $A40 billion will be needed to fund growth in the Australian domestic gas sector and related areas during that period, creating major opportunities for small-to-midcap companies, according to Taliangis.
“Core estimates that $A5-7 billion in investment could be undertaken directly or indirectly as a result of the activities of smaller-to-midcap companies,” he said.
While he expected consolidation in the growing coal seam methane sector, it would continue to provide opportunities for small and mid-size players.
“Coal seam methane is expected to play a pivotal role in east coast markets through to 2020,” Taliangis said.
“The sector has been subject consolidation as larger companies realise the resource potential, and customers and investors gain greater comfort regarding deliverability and reserves. Nevertheless, there a variety of niche plays which will continuo be exploited by smaller companies, targeting electricity and select industrial companies.”
Taliangis was giving delegates to the conference a partial preview of Core Collaborative’s 2020 Gas Outlook report.
The report also found that Australia’s gas requirements will be met by existing reserves through to 2017 and potentially beyond 2020, assuming modest success from proposed exploration.
“The increasing contributions from CSM, which the study indicates will supply up to 35% of east coast demand, and offshore Victoria are offsetting decline of traditional sources such as the Cooper Basin,” he said.
“Despite the balance of demand and supply, we should anticipate price increases, primarily due to higher cost of doing business and the reducing levels of associated gas liquids.”
In eastern Australia, new contracts were expected to be met largely by Gippsland, Otway and CSM reserves.
In Western Australia, growth would depend largely on the North West Shelf or large-scale replacement reserve.
In the Northern Territory, Blacktip was expected to meet total domestic demands beyond 2010 and the Amadeus Basin was capable of bridging any gap. The exception was at Gove, where the Alcan alumina plant would require large quantities of gas.
The PNG Gas Project would not be required before 2012 to meet demand other than the Gove alumina plant. Delivery of PNG gas prior to 2013 would slow other gas sales, primarily CSM, and would probably reduce prices, the report found.
Core Collaborative found that while there was a bright outlook for natural gas until 2020, clear government direction was now essential.
“Federal and State Governments must promptly establish a coordinated approach to greenhouse emissions policy to prevent delays in major gas investment,” the consultancy said.
“Natural gas is expected to be the most significant element of Australia’s mid to longer term response to climate change. Use of gas in electricity generation will halve emissions relative to coal alternatives. No alternative, perhaps with the exception of nuclear energy, can deliver the size of the gains that gas can in terms of emission reductions.”
