While his colleague Saul Kavonic had previously said importing gas would be more expensive than diverting gas from Gladstone, Perth-based Howell believes AGL's plan may have merit given that as domestic legacy fields slow Queensland CSG-LNG diversions will be from marginal suppliers.
The cost of sending gas to Melbourne from Japan in 2021 will be between US$5.91 (A$7.59) and $6.60 per million cubic feet at a spot LNG price of $5.30 million British thermal units.
"This is comparable to diversions from the Queensland CSG-LNG projects and is less expensive than the likely cost of much of the currently undeveloped gas resource in eastern Australia," Howell said.
Companies with pipeline agreements can transport gas south in an economic way but those without might find gas imports a beneficial solution that also avoids access uncertainty.
Given the Bass Straight JV hegemony LNG imports would provide bargaining power to gas buyers and though an LNG import terminal might cost $60 million it is only 7.5% of what AGL spent on gas in the last financial year, he said.
"Even a potential import terminal could lead to gas purchase savings if the development is viewed as credible," he added.
From 2020 Wood Mackenzie modelling suggests that there will be less spare capacity in Queensland pipelines supply will fall below demand estimates meaning unless new developments start up or more pipelines are built imports may be an economic solution.
Queensland recently handed a 58sq.km lot of development-ready CSG acreage in the Surat Basin for domestic market use and industry has shown a high level of interest in another 395sq.km of land.
Former Santos chairman Stephen Gerlach also last week announced plans for an initial public offer of Ebony Energy for a $3 billion coal-to-gas project in the Northern Territory.
Wood Mackenzie's analysis echoes a recent Oxford Energy paper on FSRUs which found that the opening of new and likely small markets will be a boon for flexible FSRUs and industry.
Wood Mackenzie also said that FSRUs are becoming a mainstream solution for regasification terminals.
"FSRUs have enabled LNG to be rapidly opened up to new markets and lowered the barriers of entry to joining the LNG club," it said.
Oxford said FSRUs provide existing players and new entrants to the LNG market with the opportunity to quickly take advantage of lower LNG prices and availability.
While Victoria is neither a new nor small market it is one which might benefit from the agility and bargaining power FSRU supply could provide.
