Australian Gas Output Up 27%, LNG Higher Still, in 12 Months to June: Update
(Adds comment from industry)
Australian natural gas output in 12 months ending June 30, 2017 increased by 27% year on year to 3,770 petajoules (100.7bn m3), its highest level yet, energy consultant EnergyQuest said September 6. That was inclusive of a rise in LNG exports up by almost two-fifths.
National petroleum production was a record 767mn barrels of oil equivalent in the 12 months to June 2017, up 19.5% year on year, driven by surging LNG production which reached 51.5mn mt, up by 38.7%. LNG exports were almost 2.5 times the volume of national domestic gas production, which was steady at 1,119 PJ (29bn m3), according to estimates in the just released September quarterly review by EnergyQuest.
EnergyQuest CEO Graeme Bethune said the 12 months to June 2017 marked a major shift as the LNG investment boom moved deeper into its production phase, adding: “Start-up of the Gorgon LNG project has also shaken up the order of Australia’s petroleum heavyweights.”
“East coast gas production is catching up with demand”, he added.
East coast LNG production and east coast domestic gas production both increased in 2Q2017, up by 19.4% to 5mn metric tons of LNG exports and by 11.9% to 193.2 PJ (5.15bn m3) of domestic gas. Included in those 2Q2017 figures, Queensland coalbed methane (CBM) production was up 20% to 333 PJ (8bn m3), while offshore Victoria gas production, up 13% to 110 PJ (2.9bn m3).
Bethune noted that the start-up of the Gorgon LNG project has also shaken up the order of Australia’s petroleum heavyweights: "With production of 111mn boe, Shell overtook Woodside (94mn boe), BHP (90mn boe) and Chevron (72mn boe) to become Australia’s largest petroleum producer in the 12 months ending June 2017. Rankings will change again this year, with Chevron already up in second place on a quarterly basis.”
He also said Australian domestic east coast prices remain globally uncompetitive, at just A$0.26-1.77/GJ lower than Japanese import prices: "Japanese prices are among the highest in the world, as are now east coast short-term prices and prices for new gas contracts.”
Government perplexes producers
While LNG exports are rising, Australian politicians are blaming each other for the growing shortage of gas at home, which has pushed up domestic energy prices. Some have suggested exports be reduced and the federal government is currently assessing whether it will use new powers next year to curb LNG exports from Queensland.
The problem though is not rising exports, say producers, but governments that are imposing bans on hydraulic fracturing or moratoria while repeated studies into fracking are carried out, rather than encouraging gas production.
“Over the last fortnight, the government and the opposition have attacked each other for their role in the emergence of Queensland’s LNG industry," said the CEO of upstream industry body Appea Malcolm Roberts September 6.
The Australian Bureau of Statistics data confirms that strong LNG exports, including exports from Queensland, have helped cut back Australia’s trade deficit and played a key role in driving Australia’s economic growth of 0.8% in the June quarter 2017, he said. Oil and gas extraction rose by 8.2% over the June quarter, following a record $23bn ($18.4bn) in LNG exports in 2016-17.
“The political argument taking place at the moment is even more detached from reality when we have policy proposals that would effectively discourage investment in new gas supply just when Australia needs to attract up to A$50bn to maintain supply to 2030," he said.
Seeking to avoid repeating the same error as before, the government of Queensland awarded Senex a gas production licence September 5, with the explicit requirement that the domestic market should have first rights to buy the gas. First gas could come in 2019.
Shardul Sharma