A GAS discovery is not the same as an oil discovery. Oil means immediate dollars, but any potential gas recovery first requires market creation, which means someone else wanting to use more gas over a comparatively long period of time.
A GAS discovery is not the same as an oil discovery. Oil means immediate dollars, but any potential gas recovery first requires market creation, which means someone else wanting to use more gas over a comparatively long period of time.
The liquefied natural gas business, in particular, is very technological and capital-intensive and has required 20-25 year contracts.
LNG is becoming more like a commodity – with some ventures now giving customers upstream equity, and claims of some new technologies’ efficiency to monetise stranded gas – but long-term contracts remain the key to development.
Australia has no shortage of known gas reserves, but potential domestic and international markets appear reliant on greater certainty regarding Australia’s energy policy, including related fiscal regimes for production, distribution and infrastructure.
Increasing demand for gas for power generation throughout Australia may provide some of the market, but the WA market remains small. The deregulated market in the eastern states is still in its infancy, and a number of generators and distributors in that market seem to be struggling to manage the conditions.
The Australian Bureau of Agricultural and Resource Economics forecasts natural gas use in Australia to increase by 96 per cent over the two decades to 2019-20 and the WA portion to more than double to almost 40 per cent of the Australian total during this period.
In light of these forecasts, the WA Government and private operators have looked at supplying WA gas to the eastern states, but do not believe the time is right to pour money into gas recovery for this market.
The WA domestic, commercial and light industrial market is comparatively small, so the main drivers for development of large offshore fields will be large industrial projects or significant LNG contracts.
Gas-to-liquids projects for which land has already been allocated on the Burrup Peninsula are forecast to need one petajoule of gas per day, while a Sasol Chevron project, still under consideration for the State’s north-west region, would require 20 trillion cubic feet.
The Sasol Chevron project would be the second largest industrial development, after the NWS venture.
Two of the projects, one to produce solvents, lubricants and chemical feed-stocks, and the other ammonia, are scheduled to commence construction in the second half of the year.
The NWS venture, waiting on a decision for a huge Chinese LNG contract, has already secured sales and purchase agreements with two of these projects and a memorandum of understanding with another. The venture also has signed a memorandum of understanding with Austeel and is keen on large developments in the State’s south, where Alcoa already produces 20 per cent of the world’s alumina.
Lower commodity prices in the late 1990s resulted in a lot of the then forecast market for gas disappearing, with large resource projects or expansions put on hold. Many companies now proposing large projects are saying they need greater certainty concerning gas prices and fiscal and regulatory regimes.
But if Federal and State Governments are able to set up regimes attractive to gas-intensive industries, Australia’s political stability and proximity to Asian markets would add to the mix to secure development of WA’s gas reserves.
NWSGas general manager Akos Gyarmathy said the NWS venture alone had reserves sufficient to supply an expanding domestic market and further LNG markets.
There are other competitors in WA, however. An Apache Corporation consortium, including Globex Energy and Santos, has signed a memorandum of understanding to supply 108 terajoules of gas per day to the proposed GTL Resources methanol plant, and ChevronTexaco and partners are hoping to start up the Carnarvon Basin’s second major LNG and domestic gas development, from Australia’s largest gas field, the Gorgon field 200 kilometres west of Dampier.
The Gorgon area contains proven reserves of 13.8 trillion cubic feet and possible reserves of up to 21.5 trillion cubic feet, but needs major contracts to underpin development. Like the NWS venture, the Gorgon area partners, including Shell, Mobil, BP, AEC and Woodside, are pursuing LNG markets in China, Japan, Korea and North America and customers from WA’s potential gas-to-liquids industry.
Meanwhile, ChevronTexaco is working to be market ready, considering how best to set up a stand-alone development bringing gas to Barrow Island.
Further north, in the Browse Basin, Woodside Energy’s Scott Reef and Brecknock gas fields contain an estimated 2.5 trillion cubic feet of gas, while in the South West onshore Perth Basin, Amity Oil has plans to further drill the Whicher Range field, which is thought to contain up to four trillion cubic feet of gas.
The liquefied natural gas business, in particular, is very technological and capital-intensive and has required 20-25 year contracts.
LNG is becoming more like a commodity – with some ventures now giving customers upstream equity, and claims of some new technologies’ efficiency to monetise stranded gas – but long-term contracts remain the key to development.
Australia has no shortage of known gas reserves, but potential domestic and international markets appear reliant on greater certainty regarding Australia’s energy policy, including related fiscal regimes for production, distribution and infrastructure.
Increasing demand for gas for power generation throughout Australia may provide some of the market, but the WA market remains small. The deregulated market in the eastern states is still in its infancy, and a number of generators and distributors in that market seem to be struggling to manage the conditions.
The Australian Bureau of Agricultural and Resource Economics forecasts natural gas use in Australia to increase by 96 per cent over the two decades to 2019-20 and the WA portion to more than double to almost 40 per cent of the Australian total during this period.
In light of these forecasts, the WA Government and private operators have looked at supplying WA gas to the eastern states, but do not believe the time is right to pour money into gas recovery for this market.
The WA domestic, commercial and light industrial market is comparatively small, so the main drivers for development of large offshore fields will be large industrial projects or significant LNG contracts.
Gas-to-liquids projects for which land has already been allocated on the Burrup Peninsula are forecast to need one petajoule of gas per day, while a Sasol Chevron project, still under consideration for the State’s north-west region, would require 20 trillion cubic feet.
The Sasol Chevron project would be the second largest industrial development, after the NWS venture.
Two of the projects, one to produce solvents, lubricants and chemical feed-stocks, and the other ammonia, are scheduled to commence construction in the second half of the year.
The NWS venture, waiting on a decision for a huge Chinese LNG contract, has already secured sales and purchase agreements with two of these projects and a memorandum of understanding with another. The venture also has signed a memorandum of understanding with Austeel and is keen on large developments in the State’s south, where Alcoa already produces 20 per cent of the world’s alumina.
Lower commodity prices in the late 1990s resulted in a lot of the then forecast market for gas disappearing, with large resource projects or expansions put on hold. Many companies now proposing large projects are saying they need greater certainty concerning gas prices and fiscal and regulatory regimes.
But if Federal and State Governments are able to set up regimes attractive to gas-intensive industries, Australia’s political stability and proximity to Asian markets would add to the mix to secure development of WA’s gas reserves.
NWSGas general manager Akos Gyarmathy said the NWS venture alone had reserves sufficient to supply an expanding domestic market and further LNG markets.
There are other competitors in WA, however. An Apache Corporation consortium, including Globex Energy and Santos, has signed a memorandum of understanding to supply 108 terajoules of gas per day to the proposed GTL Resources methanol plant, and ChevronTexaco and partners are hoping to start up the Carnarvon Basin’s second major LNG and domestic gas development, from Australia’s largest gas field, the Gorgon field 200 kilometres west of Dampier.
The Gorgon area contains proven reserves of 13.8 trillion cubic feet and possible reserves of up to 21.5 trillion cubic feet, but needs major contracts to underpin development. Like the NWS venture, the Gorgon area partners, including Shell, Mobil, BP, AEC and Woodside, are pursuing LNG markets in China, Japan, Korea and North America and customers from WA’s potential gas-to-liquids industry.
Meanwhile, ChevronTexaco is working to be market ready, considering how best to set up a stand-alone development bringing gas to Barrow Island.
Further north, in the Browse Basin, Woodside Energy’s Scott Reef and Brecknock gas fields contain an estimated 2.5 trillion cubic feet of gas, while in the South West onshore Perth Basin, Amity Oil has plans to further drill the Whicher Range field, which is thought to contain up to four trillion cubic feet of gas.