On 8 December, the Australian Energy Market Operator (AEMO) published the 2016 WA Gas Statement of Opportunities that forecast gas supply and demand over the 10 years from 2017 to 2026. This is the first time AEMO has published the report since taking over operation of the WA gas market from the Independent Market Operator on 30 November 2015.
The key findings are reported as follows:
- Base scenario – WA domestic gas market is expected to be well supplied, with potential gas supply expected to remain higher than forecast gas demand over the outlook period.
- There is a risk to supply after 2021 if there is no continued investment expenditure into the development of gas reserves.
- Several domestic production facilities may not have sufficient developed reserves to continue operating beyond 2021. From 2022, the level of supply is subject to the continued expenditure to develop gas reserves supplying the WA domestic market.
- Growth in domestic gas demand is forecast to be around 0.1% over the outlook period, as only a handful of large gas consumers are expected to enter the market over the 10-year horizon.
- There is greater potential for growth in gas demand from customers located outside of the South West interconnected system (SWIS) than in the SWIS. This is driven by potential fuel-switching from diesel to gas and prospective small new mining facilities, coupled with limited growth in electricity generation forecast for the SWIS.
- Exploration in WA’s gas basins is at its lowest level since 1990. If exploration remains low, new gas projects may not be developed and existing domestic gas production facilities may cease production due to lack of gas feedstock. At the current production rates of domestic gas and liquefied natural gas (LNG), proved and probable (2P) reserves can last until 2035, but a large proportion of these reserves are held by LNG export companies and joint ventures. These suppliers may only make gas available beyond their domestic market obligation quantities if the price is commercially viable.
In a related report, on 9 December 2016, the State Government announcing the first natural gas flowing into the State’s integrated domestic system from the Chevron-operated Gorgon Project. Flows begin at 150 Tj per day, with Synergy taking 125Tj, although the plant has capacity to produce 300Tj per day.