Australia Considering LNG Imports

In a spark of ingenuity more befitting a Balkan state, Australia needs to start importing LNG to satisfy domestic demand. I can't help but admire this sort of perfect blindness and lack of long-term thinking.

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Oops, should of checked before positing on the same subject. Topic close to home; let me know if any questions on how we end up in a role of largest exporter with shortage of domestic gas... 

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How did you manage it? Seriously. I'm asking as someone whose government stopped South Stream to avoid overdependence on Russian gas (how do you get more than 100% dependence is beyond me) and now wants to join Turkish Stream because it's so much better to be dependent on both Turkey and Russia. 

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Just how Australia ended up with a shortage of domestic gas is an interesting question but I can shed some light on it. My understanding is that much of the LNG from those big projects was sold forward at a time when gas prices were fairly low but the project was still economic. Supply contracts are locked in. But while the big projects sere being built, activists bluffed state governments into preventing exploration and development of further projects, which extends to just looking for the stuff - even for conventional gas deposits - across most of Australia. This is in part due to how resources are treated here legally, as they are not part of the freehold title. That means the farmers don't get as much a share as they do in the US and sometimes nothing at all, and so they are often worse than the activists.

The Northern Territory (a huge, underpopulated area) has since reversed this blanket ban, but bringing new projects online will take some time. Importing gas is not that straight forward, incidentally. Those big gas projects are in the North and the users in the South but there is no connecting pipeline and LNG ships, I believe, required a purpose built facility to import the gas. There are none in Aus, and no-one is building one.. strange but there it is.

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This was a known problem.  I recall discussing this Oz LNG import issue on the now defunct Oilpro forum a couple years ago.  Here's an article from 2016, warning about an Oz LNG shortage by 2019:

Australia to import LNG? When the illogical makes sense

... this makes it likely that the three LNG plants will suck up natural gas that would otherwise have been available to the domestic markets, creating a potential shortage sometime around 2019.

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This is so true.  There is a current proposal for two offshore importers (the country has no gas of its own) to join as a JV and supply the east coast of Australia with LNG.  The tank farm is reported to be built in Sydney.  

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RE Tom Kirkman's reference. 

https://www.reuters.com/article/us-column-russell-lng-australia/australia-to-import-lng-when-the-illogical-makes-sense-russell-idUSKBN13G0EJ

Australia to import LNG? When the illogical makes sense: Russell

 

It only makes sense if your priority is appeasing NIMBYS and greenies over the cost to Australians and national security. RCW


 

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Australian gas network for your viewing pleasure: http://www.gasbb.com.au/

Almost all of Queensland gas comes from Coal Seam Gas - considered unconventional resource. Its development is only made possible by start of the export industry. Local consumption is fairly small compared to the exports so for now government wrestled with operators and they send more gas to the local market. It just won't be cheap as in times when gas was by-product of oil production in Cooper basin or LNG trains where under construction and wells needed consumer to prepare it for ramp-up.

Pipeline tariffs is another issue - that's a big country and they charge ~$2/GJ per 1000km. Bigger issue is absence of pipeline from QLD to NSW (goes via Moomba in Central Australia), West to East or North-South (NEG will be commissioned in Dec but only 12" and good for ~90GJ/d; some of offshore wells produce multiples of that).

As weird as it sounds - LNG import may make money to its proponents. Same money VIC and NSW consumers would loose - only hope they will make a connection but likely not - nasty gas companies and mighty "frackers" are to blame.

 

 

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(edited)

Just more incentive for Australia to add more solar, wind and hydro.

Sometimes you just have to wonder if certain parts of the fossil fuel industries like shooting themselves in the foot.

Edited by Refman

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On ‎6‎/‎11‎/‎2018 at 11:27 PM, Refman said:

Just more incentive for Australia to add more solar, wind and hydro.

Sometimes you just have to wonder if certain parts of the fossil fuel industries like shooting themselves in the foot.

@Refman, you realize Australia isn't exactly mountainous country with plenty of rain? Potential for hydro (generation or energy storage) is somewhat limited and already tapped into with Snowy system build after WWII. As for the wind and solar - some Russian trolls and paid (by mighty fossil fuel industry, no else) stooges saying aggressive renewable generation targets (like 50%) is what actually lead to blackouts and energy poverty (allegedly) experienced by fine folks of VIC, NSW etc... (that's me being sarcastic)

Seriously, I wouldn't put a blame on gas producers for restrictions, bans, red tape and lack of transport infrastructure or cost thereof. Populists government need to have their share - Labor loosing SA election may be a sign of awakening (that's me being wishfulthinking).

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Isn't Australia one of the top LNG exporters? Are they still having internal shortages? 

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On 6/15/2018 at 2:07 AM, HermitMunster said:

Isn't Australia one of the top LNG exporters? Are they still having internal shortages?  

that's an very Aussie thing mate, you won't understand:)

New development of the saga - seems there is a bad blood between Baulderstone and his ex-employer Santos.

Competition is good, provided it is fair (my doubts there). NSW is already on 95% imported gas and hooking itself on crude-linked LNG would be pretty stupid thing to do. But heck, we wouldn't be in this situation by doing smart things (aka developing own gas and not overbuilding LNG capacity above budget and beyond schedule - because there projects competed for resources on a freaking island) ...

A spat over gas prices has erupted between the Andrew Forrest-backed consortium planning to build Australia’s first import facility and Santos as concerns grow that the domestic producer may be forced to shelve its controversial Narrabri project in gas-starved NSW.

Santos’s long-delayed Narrabri development could be axed if Mr Forrest’s proposed liquefied natural gas import terminal proceeds, under an analysis plotted by Macquarie.

The state government could treat the billionaire’s LNG scheme as a new source of gas supply, leading it to reject Narrabri and dealing a potentially fatal blow to a project already hobbled by community opposition, delayed approvals and reserve downgrades.

Twiggy vs Narrabri.jpg

Twiggy vs Narrabri 2.jpg

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Danilka - whats the current status of the pipeline. I was working in WA / NT from 2013-16 and the pipeline was deemed to be the great saviour to get NT gas to SE Australia but since leaving I have lost interest.

The NT governments arrangements with ENI are on a take or pay basis. Eni want to see that pipeline or they will end up running Yelcherr for free for the last 2-3 years of the 25 year contract term. In addition that plant is running well under capacity.

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10 hours ago, DanilKa said:

that's an very Aussie thing mate, you won't understand:)

New development of the saga - seems there is a bad blood between Baulderstone and his ex-employer Santos.

Competition is good, provided it is fair (my doubts there). NSW is already on 95% imported gas and hooking itself on crude-linked LNG would be pretty stupid thing to do. But heck, we wouldn't be in this situation by doing smart things (aka developing own gas and not overbuilding LNG capacity above budget and beyond schedule - because there projects competed for resources on a freaking island) ...

A spat over gas prices has erupted between the Andrew Forrest-backed consortium planning to build Australia’s first import facility and Santos as concerns grow that the domestic producer may be forced to shelve its controversial Narrabri project in gas-starved NSW.

Santos’s long-delayed Narrabri development could be axed if Mr Forrest’s proposed liquefied natural gas import terminal proceeds, under an analysis plotted by Macquarie.

The state government could treat the billionaire’s LNG scheme as a new source of gas supply, leading it to reject Narrabri and dealing a potentially fatal blow to a project already hobbled by community opposition, delayed approvals and reserve downgrades.

Twiggy vs Narrabri.jpg

Twiggy vs Narrabri 2.jpg

 

Did you cut those out just for me? lol

Thank you for giving me the straight dope. Why can't Aussies just get along? haha

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6 hours ago, HermitMunster said:

 

Did you cut those out just for me? lol

Thank you for giving me the straight dope. Why can't Aussies just get along? haha

u r welcome:)

For most part, Aussies getting along quite well. It just when it comes to realestate, energy, finances, etc there seems to be a unique way of getting in trouble. Maybe tolerance for BS is too high? 

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