'Critical': Gas shortage fears shut down by Curtis Island projects

INDUSTRY giants have hit back at claims of a looming gas shortage that could hurt Gladstone's three liquefied natural gas plants.

Queensland Curtis LNG and Santos GLNG sites have outlined their supply plans for the short and medium term, following new claims they could hit a gas shortage by 2019.

QGC Curtis Island200th LNG ship.
QGC Curtis Island200th LNG ship. Murray WareGladstone

The supply issues were raised yesterday in a Blue Energy's December quarter report, where it also highlighted its solution: a proposed 200km pipeline to connect northern and southern markets.

Queensland Gas Company, owner of QCLNG, says its Surat Basin wells will supply its LNG site in the short and medium term.

"We are making good progress at our Charlie project which will ensure continuous development of tenements in the Surat Basin," a QGC spokesperson said.

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Meanwhile, Santos says its long-term strategy is to use a combination of third party gas supplies, underground storage and Queensland gas field stock.

But the Blue Energy December quarter report says the gas shortfall is reaching a "critical" level and the Curtis Island projects could hit a supply shortage by 2019.

"Those businesses reliant on gas as feedstock and did not lock in long term gas supply contracts several years ago, (at lower prices) are now at risk of not being able to secure sufficient long term gas," the report says.

The company report says new drilling projects need to be made in the next 18 months to combat the shortage.

Listen: Blue Energy CEO John Phillips explains 200km pipeline vision



Alternatively, Blue Energy claims it could have the solution, with a proposed 200km pipeline stretching from Moranbah in the north-west, through Emerald, to an existing pipeline at Denison Trough North. which could connect the northern and southern gas markets.

"To date there is no significant development drilling being undertaken specifically to meet the domestic shortfall. Should the forecasts for domestic gas demand prove to be inaccurate, the shortfall may well be considerably more than currently estimated," Blue Energy said.

"With lag time between identifying gas shortfall and bringing new gas production on to fill the gap lengthening, and as there is no significant storage capacity, the gas situation on the east coast is becoming critical."

Blue Energy, which has gas and oil projects in Queensland and the Northern Territory, noted outlawing onshore gas exploration in some states created another hurdle for LNG projects.

Australia Pacific LNG did not respond to The Observer's questions about its gas supply.

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