Browne calls the problems of the past two years - higher prices, bitter political arguments, domestic dissatisfaction, threats of export curbs by a free trade champion prime minister and an inquiry from the competition watchdog - all a "storm in a teacup" compared with what is coming.
From the mid-2020s utility bills will rise, squeezing disposable incomes and Australian gas-intensive industries such as petrochemicals and fertiliser production, will start to struggle to compete globally," he warns.
" A risk of closures will likely lead to more public pressure on the gas industry and government, leading to politicians stepping in (again) to berate the industry and propose solutions."
At best, a new and uncertain market reality awaits gas consumers.
Two things are certain: the east coast will start paying the global LNG price, and multiple domestic LNG import terminals will have a material impact on meeting demand.
"A combination of volatile gas demand, declining mature gas fields and LNG exports will lead to impending gas shortages where gas is consumed most in Australia: on the east coast. LNG is now both the partial cause and the potential solution to these impending gas shortages," he wrote.
After more than 50 years of production the offshore Gippsland Basin is declining, and despite new but small projects like Cooper Energy's Sole gas development east coast markets - New South Wales, Victoria, South Australia and Queensland - will be short within five to seven years.
The market will need to do what it has already been doing, to a point, and draw on Queensland's CSG reserves, though much are already designated for export to Asian LNG markets.
To keep gas local, producers will need an incentive.
This means Australian gas buyers will need to start paying a netback price and Australian customers will need to start competing with Asian buyers for Australian gas.
In Australia, gas sits at an average of $8-$10 per gigajoule - though some areas can see prices up to $13/GJ - but the Asian spot price this month is $13/GJ, making even the netback price much higher.
Netback will be the reality from the early 2020s, he says.
"From now on factors such as Chinese attempts to clean up its air and Japanese summer heatwaves will directly impact east Australian gas prices and consumers," he noted.
"Looking ahead, rapid LNG demand growth in Asia is leading to concerns over broader LNG market tightness, which could see further LNG price inflation.
High prices don't always hamper development
On the upside, higher gas prices could make some areas suddenly economic, such as Beach Energy's offshore Otway gas interests and Senex's Project Atlas, despite a differing price outlook between states.
"The same goes for Santos's Narrabri project in New South Wales. The project is currently facing significant political heat but higher prices will undoubtedly be beneficial to project economics," Browne wrote.
Interestingly, a Macquarie note from last week suggested the opposite: LNG imports would increase supply to a point that Narrabri might not be needed, and it would also give politicians a reason to red light a politically unpopular project.
"We expect the NSW state government could prefer, for political reasons, the installation of the LNG import facility to coal seam gas development. We expect this could result in the final nail in the coffin for Santos' stalled Narrabri coal seam gas project in northern NSW," Macquarie said last week.
LNG import on the cards
What comes as government and industry battle isn't certain but overbuilding LNG import terminals is a "distinct possibility".
AGL Energy is worried about supply, and given gas prices are already linking to LNG prices "it seems to see little difference between buying Australian piped gas and importing LNG directly. It has proposed Australia's first LNG import facility".
That proposal has been followed by three more: Australian Industrial Energy, ExxonMobil and Mitsubishi, though WoodMac suggests that one will be enough to supply demand into the 2030s.
"But after overbuilding east coast LNG export capacity, we cannot rule out overbuilding of LNG import capacity as well, despite the overall inefficiency of the outcome as players prize control and flexibility over collaboration," Browne wrote.
Operators' lack of interest in collaboration has been noted by other WoodMac analysts, with the recently departed Saul Kavonic saying that the ‘boys and girls of gas companies don't like to share their trains', pointing to three LNG export facilities on the Queensland coast that have little shared infrastructure.
"We see AGL's terminal as the frontrunner as its residential and power generation based gas demand is already all locked in internally. The other projects still need to firm that demand up," Browne wrote.
However, AIE announced in June that it has signed memoranda of understanding with 12 industrial customers for its planned LNG import facility, and had chosen Port Kembla as the location.
The NSW state government has declared the project critical infrastructure lessening permit time from 18 months to a year, and AIE has suggested it could be supplying customers by next year.
AGL, meanwhile, has signed port and pipeline contracts and expects final investment decision next year.
And yet the race isn't won.
"ExxonMobil may ultimately have the strongest case for taking LNG import capacity in the southern states ," Browne said.
"As one of east Australia's largest gas producers, [it] could pursue LNG imports as a defensive move, allowing them to retain its supply flexibility for customers and protect its market share."
