The Australian Energy Market Operator (AEMO) recently released its Gas Statement of Opportunities (GSOO) for 2024, providing insights into the future of natural gas consumption and supply in Australia.
Associate Professor Roger Dargaville from Monash University shared key trends and challenges highlighted in the report.
According to the GSOO, natural gas consumption in Australia is expected to gradually decline in the coming years, driven by increases in the electrification of domestic and industrial heating.
This shift reflects a global trend towards cleaner energy sources and reduced reliance on fossil fuels.
One significant finding of the report is that without changes to planned production, gas supply may not meet demand in 2026 and beyond.
This highlights the need for increased production to ensure a reliable supply of gas for homes, businesses, and gas-powered electricity generation.
Two-thirds of the gas produced in Eastern Australia is currently exported as liquefied natural gas (LNG).
However, exports are forecast to decline in the future as resources are depleted and global demand decreases.
Dargaville stated that a decline in exports could impact Australia’s economy, as LNG exports have been a significant source of revenue.
One sector expected to see an increase in gas demand is gas-fired power generation, particularly from around 2035 onwards as more coal-fired power stations are retired.
This underscores the importance of gas-powered electricity generation in maintaining energy reliability and security during the transition to renewable energy sources.
At the household level, switching to electricity for heating and cooking can result in lower energy bills and improved indoor air quality.
Additionally, reducing reliance on natural gas can help reduce carbon dioxide emissions, contributing to global efforts to combat climate change.
Looking ahead, the GSOO forecasts a gap in gas supply for southern states from 2028, as production from the Bass Strait continues to decline faster than demand.
Commenting on the forecasted supply gap, AEMO CEO Daniel Westerman highlighted the need for new infrastructure investments to meet demand from homes, businesses, and gas-powered electricity generation.
He emphasised the importance of gas-powered electricity generation in reducing emissions and maintaining energy reliability during the transition to renewable energy sources.
“Flexible gas-powered electricity generation is an essential component of the energy mix into the future.
“Gas, along with batteries and pumped hydro, will enable higher rates of renewables and support electricity reliability as Australia’s coal-fired power stations retire,” said Westerman.
AEMO has evaluated various investment options to address the forecasted gas supply gap, including upgrading pipelines, increasing domestic gas supply, and building LNG import terminals.
While these measures could delay supply shortfalls, a combination of them will be necessary to fully resolve gas supply issues.
AEMO has also taken steps to manage operational risks, such as contracting capacity at the Dandenong LNG storage facility.
Additionally, proposed stage 2 measures aim to establish a framework for ensuring gas reliability and security on the East Coast.
