Report tips 50% gas demand boost

The Australian Petroleum Production and Exploration Association has seized on findings in the recently released International Energy Agency’s world energy outlook that natural gas consumption will increase by almost 50 per cent by 2040.

Appea chief executive Malcolm Roberts said the recognition that natural gas would be the fastest growing of the fossil fuels in future was good news for Australia, which is expected to become the leading exporter of liquefied natural gas by 2018.

The report, which found renewables were to become the leading source of new energy supply from now to 2040, said natural gas, which can be used to backup intermittent power generation, was a good fit for a gradually decarbonising global energy system.

“More than $200 billion has been invested in LNG projects (in Australia), creating thousands of jobs, export income and new revenue for the commonwealth and state governments,” Mr Roberts said.

“The competition for investment will be intense.

“If Australia wishes to seize a share of this investment, businesses must continue to lift industry productivity, while governments should focus on removing unnecessary regulatory and other costs.”

Much of the increased 47 per cent natural gas production forecast by the IEA is set to come from developing unconventional sources such as coal seam gas and shale gas, a nascent industry in Western Australia.

Mines and Petroleum Minister Bill Marmion has previously said shale gas could ensure WA’s energy security and provide significant economic benefits within the decade.

A 2013 report from the Australian Council of Learned Academies found there were 396 trillion cubic feet (tcf) of gas contained in the state's four basins, and if all prospective basins were considered, the undiscovered resources could be in excess of 1,000tcf, although this value has a high degree of uncertainty.

WA's current domestic gas consumption is about 0.33tcf per year.

Most of WA's shale gas resources are in the Canning Basin, while there are also shale gas resources in the Carnarvon and Perth basins and the Amadeus basin, which stretches slightly into the state from its main body in the south of the Northern Territory.

The IEA report also contained warnings for the future of the natural gas industry, noting it would not be “plain sailing” for those involved in the commodity.

It said there were plenty of gas buyers in the current market, but long-term expansion was constrained by efficiency policies, competition from renewables, and potential cost blowouts at gas projects.

It said natural gas growth opportunities could be further limited if deferred investment in the current low price environment led to tighter markets in the 2020s and if methane leaks were not controlled.

The IEA said while growth in energy-related greenhouse gas emissions was forecast to slow dramatically under its central scenario the forecast long-term temperature increase was 2.7 °C by 2100.

“A major course correction is still required to achieve the world's agreed climate goal (of restricting warming to 2°C),” the report said.