Australia’s liquefied natural gas (LNG) exports may need to be diverted in order to address a potential gas shortage during the upcoming winter season. This is due to the increased demand for natural gas as many countries seek to transition to cleaner energy sources.
The Australian Energy Market Operator (AEMO) recently released a media statement announcing that the gas supply for winter 2023 has improved, but risks still exist. The statement provides important insights into Australia’s gas market and the challenges facing the country in meeting its energy demands.
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AEMO media release: Gas supply improved for winter 2023 but risks remain
According to the AEMO statement, there has been a significant increase in gas supply in Australia in recent months, driven by a combination of new gas production projects and increased investment in gas infrastructure. This is good news for consumers and businesses that rely on gas for heating, cooking, and other purposes. It suggests that there will be sufficient supply to meet demand during winter when energy use is typically higher.
However, the statement notes that risks remain, particularly around gas availability for electricity generation. Australia’s electricity grid relies heavily on gas-fired power stations to provide reliable and affordable electricity, particularly during peak demand. Any disruption to the gas supply could therefore have significant impacts on the energy market and the broader economy.
One of the key risks identified by the AEMO is the potential for gas supply disruptions caused by extreme weather events. Australia has experienced a number of severe weather events in recent years, including heatwaves, bushfires, and floods, which have all had significant impacts on energy infrastructure. If these events occur during winter 2023, they could lead to gas supply disruptions and potentially higher energy prices.
Another risk identified by the AEMO is the ongoing uncertainty around gas policy and regulation in Australia. The federal government has been under pressure to take action on climate change, which has led to calls for a transition away from fossil fuels like gas. This uncertainty could deter investment in gas infrastructure and production, impacting gas supply in the longer term.
Quotes from AEMO CEO Daniel Westerman
The risks of a short-term gas shortage and long-term supply gaps are still present as of the 2022 (Gas Statement of Opportunities) GSOO because of declining production in southern Australia, according to AEMO CEO Daniel Westerman.
According to AEMO’s 2023 Victorian Gas Planning Report (VGPR), Victoria can supply gas to Queensland via the Moomba Sydney Pipeline (MSP) through New South Wales. Alternatively, Victoria can import gas from Queensland via Culcairn, as the MSP is bidirectional. There are also proposed projects to make the Eastern Gas Pipeline (EGP) and SEA Gas pipelines bidirectional if LNG receiving terminal projects at Port Kembla and Outer Harbor (in Adelaide) progress. The above figure shows the actual flow out of Victoria to neighbouring states from 2019 to 2022 and the forecast flow out of Victoria from 2023 to 2027.
“The risk of gas shortfalls each year from winter 2023 to 2026 in all southern jurisdictions remains under extreme weather conditions and periods of high gas-powered electricity generation, with those risks further exacerbated if gas storage levels are insufficient.
“To minimise shortfall risks, committed infrastructure and supply projects must be completed on time, while demand-side solutions, additional gas storage and pipeline development, and liquified natural gas (LNG) import terminals could potentially play a role.
“Annual gas consumption and summer maximum gas demand is expected to reduce and then flatten in the longer term. However, winter maximum gas daily demand for power generation is forecast to nearly double from 2023 to 2042, due in part to the electrification of heating.
Climate Council responds to AEMO report: Australia does not need new gas projects
The Australian Energy Market Operator’s (AEMO) recent report warning of a potential gas shortfall this winter has been met with a strong response from the Climate Council, which has argued that Australia does not need new gas projects.
The Climate Council, an independent non-profit organisation, has criticised the AEMO report for not adequately considering the potential of renewable energy sources such as wind energy and solar energy to meet Australia’s energy needs. The organisation has argued that investing in renewable energy and energy efficiency measures is a more effective way to address any potential gas shortages.
The Climate Council has pointed to several factors that make investing in renewable energy sources a more viable option for Australia. These include the declining cost of renewable energy technologies, the potential for energy storage solutions such as batteries, and the significant job creation potential of the renewable energy sector.
The organisation has also argued that investing in renewable energy would have significant environmental benefits, including reducing greenhouse gas emissions and improving air quality. This is particularly important given the urgent need to address the impacts of climate change.
The response from the Climate Council underscores the ongoing debate in Australia over the future of the country’s energy sector. While the government has been promoting the development of new gas projects, many experts and environmental groups argue that investing in renewable energy and energy efficiency measures is a more effective way to address Australia’s energy needs.
The debate also highlights the importance of considering the broader impacts of energy projects, including their potential environmental and social impacts. As Australia and other countries continue to transition towards cleaner and more sustainable sources of energy, it is important to ensure that this transition is undertaken in a responsible and equitable manner.
Challenges facing the global energy sector
Australia is one of the world’s largest producers and exporters of LNG, and much of its production is exported to countries like Japan, China, and South Korea. However, the government also relies on natural gas for domestic needs, including heating homes and powering businesses.
The potential diversion of Australia’s LNG exports is just one example of the global energy sector’s challenges as it seeks to transition towards cleaner and more sustainable energy sources. Much work remains to be done in order to ensure that this transition is successful and that it can build a more sustainable and resilient energy system for the future.
Source&Image: AEMO Media Release 16/03/2023, Climate Council Media Release 16.03.2023
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