While the Federal Government’s gas-fired recovery plans still appears unable to gain traction, there is one state where gas plays a prominent role.
In its latest Western Australian Gas and Downstream Opportunities Study, ACIL Allen noted that the state’s domestic gas market will remain well supplied over the next 15 years before the drawdown of existing reserves is inadequate to meet projected demand.
This is in stark contrast with the east coast where consultancy EnergyQuest warned earlier this month that the southern regions on Australia’s east coast are already having to contend with the decline of legacy gas-producing basins.
To rub further salt, ACIL Allen added that its gas market modelling demonstrates there is likely to be capacity within the domestic gas market to support the formation of new downstream industry development projects.
Western Australia can thank its long-standing domestic gas reservation policy given that a large part of this gas bounty comes from the obligations of its liquefied natural gas producers. It’s a policy that’s sadly lacking for the CSG-to-LNG projects in Queensland.
However, those same LNG producers may not have enough gas to continue producing LNG at their nameplate capacity with a significant shortfall in gas feedstock projected to commence in 2032.
There are also concerns that domestic demand alone might not be enough to support development of domestic gas projects.
Rather, the consulting firm noted that allowing domestic gas projects to export part of their supply could have “powerful commercial and economic implications for new upstream projects”.
It pointed to the state’s decision to allow the Waitsia project to export gas through the North West Shelf project in the first five years of its life as a pathway to commercialising otherwise challenging or stranded gas fields.
Hydrogen waiting in the wings
Natural gas is not the only source of energy that Western Australia is blessed with.
The state is also emerging as a likely hub for green hydrogen (and ammonia produced from hydrogen) produced using renewable energy.
Proponents for this include BP, which noted recently that WA was “an ideal place” for the development of “large scale renewable energy assets that can in turn produce green hydrogen and/or green ammonia for domestic and export markets”.
Ammonia is considered to be one of the best methods for transporting hydrogen as it is easily liquefied and has greater energy density by volume, allowing it to be more easily transported to export markets for use directly as a fuel or for conversion back into hydrogen.
Further support could come from iron ore magnate Andrew Forrest, who has been an outspoken supporter of green hydrogen while local gas supplier ATCO has flagged that it will blend renewable hydrogen into the state’s gas network by late 2022.
Taken together, this points to a bright gas future for Western Australia.
Abundant natural gas resources provide enough surety of supply that will allow the state to focus on developing its green hydrogen capacity.
This same capability would then start to replace natural gas (LNG) as the state’s primary energy export.
Maybe this is the real gas-led recovery plan?