Australia set to import gas for first time amid looming supply crisis

ABC NEWS (Australia)

Australia's first gas import terminal to come online amid looming shortfalls.

Transcript

00:00The facility is sort of alongside other big industry at Port Kembler.

00:06You've got the coal stockpiles on one side and the Blue Scope steel manufacturer just

00:12across the inner harbour.

00:13So what Squadron has done is basically dredge the inner harbour of Port Kembler to make

00:18enough space for this giant floating storage and regasification ship that, if all goes

00:24to plan, will be sailing through the Port Kembler heads in about two years' time, ready

00:29for winter 2026.

00:31And what this floating facility will do is receive LNG from LNG tankers and then store

00:38that gas on the ship and regasify it.

00:40So that means turning the liquefied natural gas into the kind of natural gas that is then

00:45piped into the east coast grid.

00:48Now the physical infrastructure in Port Kembler is pretty much complete.

00:52The company now just needs to do the crucial paperwork, I guess homework, of actually securing

00:58its gas suppliers and also securing the contracts with the companies that will supply the gas

01:05too.

01:06So it is a bit of a paradox for a country like Australia, which has huge gas reserves

01:11and is a huge LNG exporter.

01:15But the fact is, according to Squadron Energy, the east coast is running short of gas.

01:20And I spoke to the chief executive, Rob Wheels, who said the forecasts are for Australia to

01:26run short of gas in years to come.

01:28But even just this winter gone, we came very, very close.

01:31Here's what he had to say.

01:33The short answer is very, very close.

01:36And the gas storage facilities that are available currently were drawn down significantly.

01:41And that supply crisis led to high gas prices, which flowed into our energy electricity market

01:46as well with high electricity prices that could all have been averted had this LNG import

01:52terminal facility been available at that time.

01:55So Jane, just what is the official outlook for gas supplies?

01:59Yeah, well, Squadron reckons the outlook is pretty dire.

02:02And that's why it wants to sort of step in here.

02:04But the official outlook isn't particularly rosy.

02:07The Australian Energy Market Operator has forecast that within just a few short years,

02:12demand is likely to outstrip supply, particularly in the southeastern states of Australia.

02:18That's because of a few reasons.

02:19Firstly, there is a pipeline from Queensland.

02:22And on peak days, like in winter, when everybody's using their heaters here in Canberra particularly,

02:27the pipeline's running already at max capacity.

02:30But the biggest reason we're running out is because the fields in the gas in the Bass

02:34Strait rather, which have been really the backbone of gas supplies for the southeastern

02:39states for decades, well, they're depleting much faster than expected.

02:43And new gas fields simply have not been developed.

02:47So that's kind of how Australia has got itself into this mess where we're a huge exporter

02:52now looking to import gas to fill a domestic supply shortfall.

02:57Now, gas is really important for heavy industry and manufacturing.

03:01And as the government has said, it's going to be crucial to keeping the lights on as

03:05the country transitions to renewable energy.

03:08If those gas supplies run out, well, backers say Australians are going to be facing higher

03:13energy prices and could ultimately be crippling for manufacturing and heavy industry.

03:19So here is Rick Wilkinson.

03:20He is an energy market analyst.

03:23And I asked him, you know, how has it got to this point?

03:26Quite simply, we've run out of time.

03:29This is the only option, LNG reclassification, that will bring on significant volumes in

03:34the next two years.

03:36All the other options, be they expansion of pipelines, increased storage, or explore for

03:41and develop, take three to four years or even longer before you've reached certainty.

03:47That's Rick Wilson, an energy market analyst there, Dan, saying we've simply run out of

03:51time for any other option to plug this short-term gas shortfall.

Category

Transcript

Recommended