03 Jan 2023

Opinion Article: Claire Wilkinson writes in The West Australian about the need for new gas supplies

As most people were focused on Canberra’s recent energy market interventions on the east coast, a new assessment of the Western Australian gas market emerged, showing how we must remain vigilant to maintain our strong position.

The Australian Energy Market Operator (AEMO) found the state’s gas supply and demand over the next decade is for most years delicately balanced, highlighting that investment in new natural gas supplies is needed.

AEMO’s Western Australia Gas Statement of Opportunities – an annual report known as the “GSOO” among energy afficionados – predicts rising demand for natural gas as coal-powered generation ceases and demand from the resources sector continues.

The GSOO found gas demand in WA is forecast to rise from 1,099 terajoules a day (TJ/day) in 2023 to 1,278 TJ/day in 2032, an average annual increase of 1.7%.

This may be uncomfortable for the anti-gas activists who think gas can be “turned off” without impacting our economy and living standards.

But, contrary to concerns that increased gas use will lead to higher emissions, part of the reason for rising demand is WA’s transition to a cleaner energy economy.

With Synergy retiring its coal-fired power generators in WA by 2030, renewable energy generation can only partially replace that of coal. As a result, gas demand in the state’s biggest electricity grid, the South West Interconnected System (SWIS), will increase almost 150% – from 127 TJ/day in 2023 to 304 TJ/day in 2032. Because gas-fired power generation emits half the emissions of coal, Synergy expects its emissions to fall 80 per cent by 2030 compared to 2020-21 levels.

The increased gas use in the SWIS will also importantly provide firming power to the electricity grid when renewable generation from wind and solar is fluctuating, reducing the risk of power blackouts to WA homes and businesses.

It underscores the central role that gas is playing in WA’s energy mix, supporting rising renewable energy by providing baseload power while enabling higher emitting fuels such as coal to be retired.

The GSOO also revealed that newly committed resources projects are expected to add 43 TJ/day to gas demand by 2026.

These projects include iron ore and gold, as well as mining and minerals processing projects that are vital to the energy transition such as lithium and nickel.

In short, gas is part of enabling these critical minerals for the energy transition to come to market.

But to meet the demand that the GSOO outlined, we need new and ongoing investment in supply to replace existing producing fields as they run low.

Indeed, the GSOO noted that gas supply and demand in WA is finely balanced in the coming years, although there are options available to ensure the market is adequately supplied.

This includes short term measures such as drawing from existing gas storage and increasing production from existing gas plants, as well as bringing on new gas supply over the longer term.

From 2030 onwards, the gas market is forecast to move into a larger deficit, with shortfalls of over 200 TJ/day between 2030 to 2032.

As highlighted by AEMO’s Kate Ryan, the outlook “…reiterates the importance of timely investment in new gas developments, firming technology and storage solutions to maintain a secure and reliable energy system”.

WA is in a fortunate position, with a large amount of undeveloped resources and the lowest gas prices in the OECD.

The State Government, too, understands the industry and the economic benefits of the sector, and how gas supports the pathway to net zero.

Importantly, new gas supplies for WA’s use will not only come from dedicated domestic gas plants, but also from WA’s successful liquefied natural gas (LNG) industry, which provided 12 per cent of global LNG exports in 2021.

Many of WA’s sizeable offshore gas reserves would not be developed if they were only quarantined for WA consumption, as the state’s gas demand alone is insufficient to warrant the multi-billion-dollar investments required.

As the GSOO highlights, between 2027 and 2029, supply is forecast to slightly exceed demand as the offshore Scarborough gas field contributes an extra 180 TJ/day to domestic supplies as its gas starts being processed by Karratha’s Pluto LNG plant.

If gas is going to be increasingly relied upon to decarbonise our energy mix and support renewables, we need to supercharge the positive investment environment to bring on new supply by ensuring we have an efficient regulatory system.

As it currently stands, the regulatory system we have means prospective oil and gas developments can take literally years to receive approvals.

The WA Government recently announced that green energy project approvals would be fast-tracked. This is welcome, and many APPEA members will benefit with their investments in hydrogen and renewables.

But expedited approvals for gas developments should also be prioritised so that discovered resources can be responsibly developed and used to support the growth in renewables and our other critical industries.

These are the kind of measures that can build capability in the state’s energy market as we confront the challenges and opportunities of a cleaner energy future.

Claire Wilkinson is the WA Director of the Australian Petroleum Production & Exploration Association (APPEA)