14/12/2017 - 09:00

WA domgas supply likely secure for decade

14/12/2017 - 09:00

Bookmark

Upgrade your subscription to use this feature.

Western Australia’s domestic gas market is likely to have sufficient supply for the next decade if Chevron's Gorgon domgas stage two proceeds on time and other replacement fields come online as anticipated, according to the latest Australian Energy Market Operator report.

WA domgas supply likely secure for decade
A timely start-up of production at Chevron's Gorgon domgas plant will ensure sufficient domgas supply.

Western Australia’s domestic gas market is likely to have sufficient supply for the next decade if Chevron's Gorgon domgas stage two proceeds on time and other replacement fields come online as anticipated, according to the latest Australian Energy Market Operator report.

That could come with a gradual price rise in the local gas price, from just more than $5 per gigajoule next year to around $7/gj in 2027, driven largely by a predicted rise in the price of oil.

Last year’s review had anticipated a surge in the price of gas to $7/gj by 2021, before declining with the forecast start of Gorgon domgas 2 in 2020.

This year’s report highlights that a delay in the start of Gorgon would be problematic for balance in the market, while another major challenge will be a need to replace depleted domestic gas reserves towards the middle of the decade.

The AEMO report also suggests new production will come onto the market to replace depleted reserves.

But the report acknowledged petroleum exploration was at a very low level in WA, with the number of wells drilled in 2017 a quarter of last year’s level.

“Based on forecast domestic gas prices and expected costs of production, new reserves will be developed,” AEMO system capacity analyst Noelle Leonard said.

“It’s not realistic to assume no new reserves will be developed ever.”

On the demand side, AEMO predicted growth outside the South West Interconnected System would be stronger than that inside, driven by the uptake of renewable power generation within the SWIS network.

Gas demand will likely rise gradually, driven by moderate increases in usage by the mining industry.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options