A new report has warned of the impact a gas shortfall from 2022 might have on Gladstone's $80-billion LNG industry.
A new report has warned of the impact a gas shortfall from 2022 might have on Gladstone's $80-billion LNG industry. Contributed

The risks currently facing Gladstone's gas industry

A NEW report has warned of the impact a gas shortfall from 2022 might have on Gladstone's $80-billion LNG industry.

According to EnergyQuest's new modelling, low CSG reserves and diversions to the domestic market could lead to shutdowns of some of the six Curtis Island LNG plant trains within the decade.

Chief executive Graeme Bethune said LNG import terminals were urgently needed in Melbourne and Sydney to counter the growing risks of a gas shortage.

The latest report, East Coast Gas Outlook to 2036, found the sector would be at risk due to insufficient CSG reserves available for the QCLNG, GLNG and APLNG projects.

Dr Bethune said current production, at about 80 per cent per year for the three plants, could be "as good as it gets”.

A clearer picture would emerge by 2025, with political pressures to divert gas away from exportation and back to the domestic market exacerbating the issue.

In 2017, the Australian Energy Market Operator and the Australian Competition and Consumer Commission forecast a gas shortfall for the southeast in 2019 and 2020 unless more gas was sourced.

This led the Federal Government to impose triggers for export controls on the Curtis Island plants, forcing them to divert gas to the domestic market.

AEMO and ACCC has since reported the new measures had helped alleviate the forecast shortage, not predicting any shortfalls until 2022.

Dr Bethune said Gladstone projects now supplied up to 25 per cent of domestic east coast gas. He warned, however, that more Queensland gas would only be a short-term palliative to the problems in the south because Queensland had challenges, too.

"We also expect Queensland gas production to start declining from 2025, due to a shortage of quality gas resources,” he said.

"Queensland also has investment risks. Maximising production from Queensland's coal seam gas (CSG) fields requires investors to be sufficiently confident of the investment climate to drill around 1000 new wells a year at a total cost of $1-2 billion.”



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