• East coast gas shortfall not likely to be solved by action from NSW or Victoria
  • Queensland is considerably warmer to the idea of more onshore projects
  • Six new tenders – one for domestic gas – hint the Sunshine State is where the answer lies

Could Queensland have the answer to the question stewing in the brains of gas consumers and politicians on Australia’s east coast, namely how we can address the coming gas supply shortfall?

As we all know, the Australian Energy Market Operator famously stated in its latest Gas Statement of Opportunities that eastern Australia could experience shortfalls on extreme peak demand days from 2025 and small seasonal supply gaps from 2026.

Further down the road, the lack of gas could lead to the controlled reduction of electricity supplied to homes and business during periods of peak demand from 2028.

More recently, it warned of immediate supply risks across south eastern Australia following an increase in gas demand due to a cold snap, lower renewable energy production and supply issues at a major plant.

To address this, the AEMO said new investment would be needed to secure enough gas to offset declining supply and meet expected demand.

This has been backed by the Australian government, which in early May released its Future Gas Strategy that ostensibly seeks to secure affordable gas as Australia moves to a more renewable grid.

One of the key steps to achieve this objective is by working with industry and state and territory governments to encourage more timely development of existing discoveries in gas-producing regions.


Easier said than done

But as the experience of companies trying to bring new projects into production has proved, talk is cheap.

There are several major gas projects with proven resources that could play a significant role in meeting supply shortfalls but which have for one reason or another experienced opposition or delays.

Santos’ (ASX:STO) Narrabri coal seam gas project in New South Wales is a key example.

Some sources have indicated that the unconventional field has 1.8 trillion cubic feet of gas, which is a significant amount by any standard and likely capable of meeting a large chunk of any expected shortfall on its own.

However, the project has experienced numerous delays due to red tape despite the state’s Independent Planning Commission granting the company approval to develop its resources all the way back in September 2020 and significant sums spent on exploration and other work since 2012.

This clearly highlights the difficulties faced by companies looking to develop projects in NSW and Victoria despite the latter having the highest usage in the country.

Plans to develop offshore resources in these states have also run afoul of regulations and red tape that are outright hostile to new oil and gas developments.


Queensland gas stepping up?

Here’s where Queensland might step up to fill this need.

Unlike its southern neighbours, the big export state has no qualms about developing new sources of gas.

In fact, it recently awarded tenders for six petroleum and gas exploration areas in the Bowen and Surat basins, one of which is earmarked entirely for domestic supply.

This takes the total amount of land released to back Australia’s supply since 2017 up to 20,000km2.

The state’s resources and critical minerals minister Scott Stewart said that Queensland exported more than 27 petajoules of gas to the southern states in the 2022-23 financial year, enough to power 520,000 homes.

Is gas from Queensland the answer to the east coasts needs?

While other options are certainly being developed, it seems more than likely that more gas from the north would be flowing down south.

Though there is no guarantee that all projects being considered will be completed or will sell into the domestic market, at least some will and these might well be enough to if not solve those woes, then at least alleviate them.

It is certainly more likely than projects in the Beetaloo Basin, Northern Territory, though it will be folly to discount those given the firepower than some operators there can bring to bear.