
EnergyQuest has released its September 2022 EnergyQuarterly report, which reveals energy crises all around the world, driven by freak weather, the Ukraine war, COVID and botched decarbonisation.
Importantly, the report points out global gas prices have outrun oil on an energy-equivalent basis.
The report takes a deep dive into the latest ACCC Gas Inquiry Report, taking a detailed look at some of their numbers, particularly some of the claims about volumes of uncontracted gas exported.
One of the myths about east coast gas is that there are large volumes of gas being exported, over and above long-term contracts, and these could be diverted domestically to meet all excess demand without upsetting Australia’s trading partners.
EnergyQuest cannot see the evidence.
The other myth is that east coast gas is super profitable – most of the companies would walk if they could get their money back.
Other highlights include:
- With energy prices at eye-watering levels around the world, we believe that Western Australia now has the lowest gas prices in the OECD. WEM electricity prices are also much lower than those in the NEM (see page 54).
- The ABS Producer Price Index for east coast gas, which also reflects contract prices, jumped by 51.8% in Q2 compared with a year previously (see page 29)
- Santos’ east coast domestic gas price in Q2 2022 was $9.24/GJ, 33.0% higher qoq. Prices realised by other companies on the east coast were around $6.40-8.70/GJ – lower than the Santos’ price. STTM prices reached astronomical levels in Q2 with increases ranging from 233.4% in Wallumbilla to 299.3% in Melbourne. (see page 35).
- Wholesale spot electricity prices also spiked, to an unprecedented average of $284/MWh in Q2, more than triple the Q2 2021 average of $85/MWh (see page 47).
- Total east coast gas demand in Q2 (both export and domestic) was 508.5 PJ (down by 1.1 PJ qoq), while supply was 496.9 PJ (down by 1.7 PJ qoq), with a deficit of 11.6 PJ compared with a deficit of 11.0 PJ a year earlier. The deficit was met by withdrawals from storage (page 35).
- Average Australian LNG prices in Q2 2022 were $17.88/GJ more than twice the level of $8.58/GJ in Q2 2021. Woodside’s average LNG price was $18.23/GJ ($8.94/GJ in Q2 2021). On the east coast, the average Origin APLNG price was $18.81/GJ ($8.86/GJ) (see page 30).
- EnergyQuest estimates Australia exported a record 82.6 Mt of LNG in the 12 months to 30 June 2022, well up on the 77.3 Mt in FY 2021 and beating the previous record set in FY 2020 of 79.3 Mt. Australia exported 19.8 Mt of LNG in Q2 2022, operating at an average of 94% of nameplate capacity of 88.6 Mtpa (see page 101).
- Australian conventional gas production increased significantly in Q2 2022 thanks to the best result from the Gippsland Basin Joint Venture (GBJV) in almost five years and soaring production from the domestic gas trains at Gorgon and the NWS (page 113).
- Gas production by the east coast LNG industry decreased in Q2 2022 to its lowest level in more than three years, but production remained slightly ahead of exports (see page 121).
- APLNG is a reserves success story. Origin reported increased 2P reserves of 108 PJ after production of 693 PJ (see page 79).
- There is also a positive interpretation of Bass Strait reserves by Woodside which indicates gross Bass Strait JV 2P reserves of approximately 1,700 PJ compared with EnergyQuest’s previous estimates of just over 1,300 PJ (see page 79).