Despite an expected decline in LNG exports this financial year, a result of halted or declining production at certain facilities and slower demand from some Asian customers, Australian natural gas production will still be supported in the medium and long term by prospective expansion projects.
These include Woodside Energy’s Scarborough project, Chevron’s Gorgon stage two development, Santos’ Barossa Gas project which will backfill Darwin LNG, Shell’s Crux development, Inpex’s Ichthys upgrade, and Tamboran Resources’ recently proposed Northern Territory LNG facility.
This year the federal government announced it was developing a future gas strategy, and called for industry and community consultation between October and November.
The gas strategy aims to provide a medium (to 2035) and long-term (2050) plan for gas production and consumption in Australia, which the government will keep flexible to promote resilience, given the level of uncertainty associated with the future of gas.
Its core pillars will be to support decarbonisation (including net zero targets), promote Australia’s energy security and affordability, maintain Australia’s trade relationships, and help the country’s trade partners on their own paths to net zero.
However, it does not mention the role of Australian gas in securing energy for trade partners, which has caused concern among producers that it will undermine investment in the sector.
Santos Chief Executive Kevin Gallagher said the company would make a ‘constructive’ submission to the government’s consultation, noting the economic and strategic risks for Australia if it were to slow gas resource development.
Gallagher said: “The fact is that the Asian region is going to need more gas supply – not less – over the coming decades, for energy security and to reach net zero goals.
“Australia has to decide whether or not it wants to unlock the wealth of its extensive gas resources for the benefit of our own economy and the economics of our trading partners, or whether the gas that will continue to be needed is going to come from the Middle East or elsewhere.”
Santos’ Barossa project was 60 per cent complete as of 30 June when including the Darwin pipeline duplication project, or 66 per cent complete when the pipeline project is excluded.
Scheduled for first production in the first half of 2025, the Barossa project will supply replacement gas to the Darwin LNG plant, which is currently supplied by the soon-to-be depleted Bayu-Undan field near Timor-Leste.
The Barossa FPSO hull was floated this year, and fabrication of the FPSO topside modules and subsea hardware is continuing, as well as planning of the gas pipeline and subsea campaigns.
Woodside is progressing work on its Scarborough and Pluto Train 2 project offshore northwest Australia, targeting first LNG cargo in 2026 and recently selling a 10 per cent nonoperating interest in the joint venture to LNG Japan.
However, the project could be delayed after the Federal Court found it had received approval before the company had adequately consulted a traditional custodian.
Woodside is planning to expand its domestic gas infrastructure to increase capacity and to develop the offshore Scarborough gas resource, together amounting to a $16-billion investment.
The gas infrastructure will include a second LNG train at its onshore Pluto facility, which will support the production of about eight million tonnes of LNG a year and be able to process gas from Scarborough – through a 430-kilometre pipeline – as well as from third-parties.
At an investor briefing in November, Woodside Chief Executive Meg O’Neill said the recent 10 per cent nonoperating interest sell down demonstrated the value of the project to Woodside’s customers.
O’Neill said: “Once operational, Scarborough would be among the lowest carbon intensity sources of LNG when delivered into north Asia.
“Execution of Scarborough is progressing, with construction of the floating production unit 50 per cent complete and fabrication of the subsea flowlines and trunkline complete.
“Fabrication of the Pluto Train 2 modules in Indonesia and site works in Karratha are progressing well.”
The Shell-operated Crux development, which received a final investment decision in May 2022, is in northern Browse Basin, 190 kilometres offshore northwest Australia and 620 kilometres northeast of Broome.
In July, Shell Australia submitted an environmental plan to NOPSEMA for the installation of the drilling template on the Crux natural gas field off the coast of WA.
The drilling template is a prefabricated steel structure with a seabed footprint of about 266 cubic metres, which will be lowered onto the seabed by a light construction vessel.
Its purpose is to act as a guide for the subsequent Crux development drilling campaign and will be installed sometime before April 2024.
Shell has identified the Crux gas field as a source of backfill gas for its existing Prelude floating LNG facility, with the capacity to supply Prelude with up to 550 million standard cubic feet of gas per day.
The project, which is scheduled for first gas in 2027, will comprise a platform operated remotely from Prelude with five wells drilled initially, and an export pipeline connecting the Crux platform to Prelude.
Production of first gas was achieved earlier this year at the Gorgon stage two development by Chevron and its joint venture partners.
The development expanded the existing subsea gas network of the Gorgon project, which exports LNG to customers across the Asia Pacific region and produces domestic gas for the Western Australian market.
The upgrade involved the installation of 11 additional wells in the Gorgon and Jansz-Io fields as well as accompanying offshore production pipelines and subsea structures to maintain feed gas supply for the gas processing facilities on Barrow Island.
Chevron Managing Director Mark Hatfield said the development marked the next phase of the Gorgon project and demonstrated the company’s commitment to providing reliable and affordable energy that supports the region’s energy security.
He said: “The development supports the longevity of the Gorgon project and the continuation of its already significant ongoing benefits, including highly skilled local employment, economic activity as well as state and federal government revenue for decades to come.
“Adding to the initial $40 billion spend on Australian goods and services from the Gorgon project since 2009, the development created more than 800 jobs in Western Australia through drilling and completion activities, subsea infrastructure installation, and project management.”