Published on March 12, 2014
1 Gas Statement of Opportunities (GSOO) January 2014 11 March 2014 – WA Power and Gas Conference Allan Dawson
Agenda • Gas Services Information – the new GBB and GSOO • GSOO – Objectives and requirements • GSOO – Key Issues • Responses to industry feedback on the first GSOO • Key Findings of the January 2014 GOO • Supply-demand balance • North West Shelf • Resources and Reserves • Future challenges for the WA LNG sector • Comparison of forecasts in July 2013 GSOO • GBB data 2
Gas Services Information – GBB & GSOO • Gas Services Information Act 2012 enacted by the WA Government in April 2012, providing for the establishment of the GBB and the GSOO • Initial provisions of the Gas Services Information Regulations 2012 were made in June 2012, formally appointing the IMO • Remaining GSI Regulations and Rules commenced on 29 June 2013 • GBB commenced operation on 1 August 2013 • First GSOO published July 2013, second GSOO published January 2014
GSOO – Purpose and Objectives • Objectives of GBB and GSOO are to promote the long term interests of consumers of natural gas in relation to: a) the security, reliability and availability of natural gas supply b) the efficient operation and use of natural gas services c) the efficient investment in natural gas services d) the facilitation of competition in the use of natural gas services • The GSOO is a periodic (annual) statement the primary purpose of which is to include information and assessments relating to medium to long term natural gas supply and demand and natural gas transmission and storage capacity in Western Australia (see sections 5 and 6 of the Gas Services Information Act 2012)
GSOO requirements GSOO must contain information about: • natural gas reserves (including prospective or contingent resources) • gas production facilities • gas transmission pipelines and pipeline augmentations • gas storage facilities • large facilities using gas GSOO must contain, for the period of at least 10 years, projected information about: • capacity of gas production facilities, gas transmission pipelines and gas storage facilities including constraints affecting those facilities • demand for natural gas (see Part 6 of the Gas Services Information Rules)
GSOO – Key Issues GSOO provides further independent insight in the WA domestic gas market: • Recognises limitations of using production capacity as a measure of supply – forecasts potential gas supply • Focuses on topics of industry concern (e.g. North West Shelf) • Provides estimates of gas usage by WA’s LNG sector • Provides coverage on international and Asia Pacific LNG markets and the potential impact on domestic gas • Considers resources in a range of basins that could potentially supply the WA domestic market • Reports on utilisation of existing gas transmission infrastructure • Provides a view of issues in the near future that may affect the WA domestic and LNG markets
Response to industry feedback The following changes implemented in January 2014 due to industry feedback: • Increased focus on NWS (reserves, contractual commitments) • Linkage of reserves to production facilities • Consideration of different production costs for each facility • Increase in assumed price elasticity of demand • Corrections in price forecast model • Reduction of time lag between LNG price and domestic gas price Still under consideration: • Inclusion of gas demand projects yet to reach final investment decision • Impact of US LNG exports on LNG pricing
Supply and Demand Balance, 2014 – 2023 Source: IMO’s Gas Statement of Opportunities – January 2014 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Quantity(TJ/day) Year Base Demand Scenario Lower Potential Supply Forecasts Upper Potential Supply Forecasts Gas Production Capacity
Key Findings – Supply and Demand Balance • For the 2014 to 2020 period, likely to be adequate gas supply to meet existing contracted gas demand and expected growth in gas demand in the domestic market assuming that commercially acceptable terms can be agreed • For the 2021 to 2023 period: • the availability of gas to the WA domestic market is likely to be sufficient if the NWS JVs supply at levels considered in the Upper potential supply forecasts, but • may not be sufficient (at forecast prices) to meet forecast domestic demand if the NWS JVs do not supply gas to the domestic market beyond existing contracts
Key Findings – North West Shelf • The NWS appears to have sufficient 2P reserves for the forecast period • But the availability of gas supply from the NWS JVs is pivotal to the domestic gas supply-demand balance for the 2021 to 2023 period and is dependent on: • the outcomes of ongoing discussions between the WA Government and the NWS JVs about the status of remaining NWS reserves • investment decisions required by the NWS JVs to access remaining undeveloped reserves • investment required to extend the life of the aging domestic gas production facility at the Karratha Gas Plant • Opportunities for other producers ???
Other Key Findings • Existing gas resources are forecast to be sufficient to meet forecast domestic and LNG (including FLNG) demand levels for at least the next ten years • WA is highly reliant on the Carnarvon Basin for gas reserves and resources • Longer‑term supplies rely heavily on WA’s unconventional gas resources (tight and shale resources), which have not yet been verified
Future Challenges for the WA LNG Sector • A number of medium to long-term growth challenges confronting the WA LNG market, such as • the potential end of premium Asia Pacific LNG pricing • a move toward shorter-term LNG contracts in the Asia Pacific region • the high relative cost of LNG production in Australia • the threat of unconventional gas entering the international gas market • These factors are not expected to affect the domestic gas sector in the 10-year forecast period
Demand forecasts – comparison of July 2013 and Jan 2014 GSOOs Source: IMO’s Gas Statements of Opportunities, July 2013 and January 2014 900 950 1,000 1,050 1,100 1,150 1,200 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Quantity(TJ/day) Year Low Scenario (January 2014) Base Scenario (January 2014) High Scenario (January 2014) Low Scenario (July 2013) Base Scenario (July 2013) High Scenario (July 2013)
Supply forecasts – comparison of July 2013 and Jan 2014 GSOOs Source: IMO’s Gas Statements of Opportunities, July 2013 and January 2014 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Quantity(TJ/day) Year Base Supply Scenario - July 2013 Lower Potential Supply Forecasts - January 2014 Processing Capacity Upper Potential Supply Forecasts - January 2014
WA’s Gas Bulletin Board (GBB) • Public website that displays near-term information about gas production, storage, transportation and demand: • Forecasts of daily gas production, storage and transmission capacity, gas flows (pipeline and storage) • 12 month ahead forecasts of changes to the capacity of production, transmission and storage facilities (maintenance reports) • Daily actuals of: • gas production by facility • pipeline and storage gas flows • gas consumption by large user facilities • Emergency Management Facility – restricted access part of the GBB activated in an emergency • January 2014 GSOO includes GBB actuals from 1 August 2013
GBB – Facility Production – 1 August to 31 December 2013 Source: IMO Gas Bulletin Board 0 200 400 600 800 1,000 1,200 1,400 1,600 Quantity(TJ/day) Gas Day Dongara Beharra Springs Devil Creek Macedon Varanus Island NWS Red Gully Total Production Capacity (LHS)
GBB – DBNGP Gas Flows (by Zone) – 1 August to 31 December 2013 Source: IMO Gas Bulletin Board 0 200 400 600 800 1,000 1,200 Quantity(TJ/day) Gas Day South West Metro Dampier
GBB – Mondarra Injection/Withdrawal – 1 August to 31 December 2013 Source: IMO Gas Bulletin Board 0 10 20 30 40 50 60 70 80 90 100 Quantity(TJ/day) Gas Day Quantity of Gas Injected Quantity of Gas Withdrawn
GBB – Gas Consumption by Industry – 1 August to 31 December 2013 Source: IMO Gas Bulletin Board 31% 7% 13% 6% 25% 19% Electricity Generation Gas Distribution Network Industrial Petroleum, LPG & Domestic LNG (no exports) Processing Minerals Processing Mining
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