South East Gas Study

More Pressure on Gas supply as a dip expected over next 5 years followed by a more rapid decline indicated in a latest study. As they say costs, price and timing is everything in developing and growing your business so David has the COE strategy right whilst the politicians have no real strategy except to state the obvious.

Offshore gas fields in southeast Australia hold less than a decade's worth of gas and opportunities for new production is limited, making it more important for the Victorian government to drop its ban on onshore gas, according to Resources Minister Matt Canavan.

Senator Canavan's words came after a new study into gas off the south-east coast found that supply is expected to dip over the next five years before starting a more rapid decline.

The outlook reduces the capacity of the gas industry to rapidly respond to spikes in peak winter demand.
Senator Canavan used the study to step up pressure on the Victorian government to end its ban. He said the state government is "gambling with the future of Victorian manufacturing."

"Victoria's decision to ban onshore gas exploration means they are becoming increasingly reliant on offshore gas," the minister said. "This is a risky strategy."

The fields off the south-east coast have already produced about 10.6 trillion cubic feet of gas, about 40 per cent of the volume initially thought to be in place. Some 3.8 tcf of reserves are left, mostly in fields that are already in production. That equates to 8-9 years of remaining supply, although in reality the gas will be produced over a longer timeframe.

While a further 3.7 tcf of gas could be recovered, there is currently no commercially viable development plan to bring the gas to market, the study found.

"Although there is potential to increase production in four of the six gas plants in Victoria, which would increase competition and put downward pressure on prices, the only way to increase reliable and affordable gas supplies is to identify new onshore and offshore gas resources," the minister said.

The Gippsland Basin, where the Esso-BHP Billiton joint venture is the dominant player, holds most of the gas, with much smaller volumes in the Bass and Otway Basins. The Sorell Basin off Tasmania's west coast has no leads or prospects.

Senator Canavan noted that increased exploration could deliver more gas, but the fields are likely to be smaller and deeper, with more impurities in the gas, making it more expensive.
The study was carried out as part of the federal government's $90 million investment in gas security and supply.

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