❓ Dr. Honey questions the Minister about potential gas shortages predicted by AEMO. The Minister dismisses the concerns, citing past inaccuracies and current market indicators.
AnsweredQoN 238Legislative Assembly
QuestionView source ↗
DOMESTIC GAS SUPPLY
238. Dr D.J. HONEY to the Minister for Energy:
The
latest WA gas statement of opportunities, which is published by the Australian
Energy Market Operator, states —
Between 2025 and 2027, domestic gas
demand is forecast to exceed potential gas supply by 51 petajoules (PJ), at a maximum
of 85 terajoules (TJ)/day.
What action is the minister taking
to ensure that industry does not face a gas supply shortage after 2024?
238. Dr D.J. HONEY to the Minister for Energy:
The
latest WA gas statement of opportunities, which is published by the Australian
Energy Market Operator, states —
Between 2025 and 2027, domestic gas
demand is forecast to exceed potential gas supply by 51 petajoules (PJ), at a maximum
of 85 terajoules (TJ)/day.
What action is the minister taking
to ensure that industry does not face a gas supply shortage after 2024?
AnswerView source ↗
That is an extraordinary question.
It is interesting because the Australian Energy Market Operator gas statement of opportunities arose from the recommendations of
the Economics and Industry Standing Committee when Dr Mike Nahan was the
chair and I was the deputy chair. It was an important recommendation because Western
Australia has the best managed domestic gas process in Australia.
Interestingly, this is the third
occasion on which the GSOO, as it is called, has predicted that we would be
short of gas. The point is that it is saying that if there are no additional
gas discoveries or gas activity, we will fall into a negative supply, but that
has not happened on each of the last occasions on which the GSOO made that
prediction. It is a prediction of the future and that future has never
occurred. Eighty-five terajoules is not a significant amount of gas. The gas statement of opportunities does
not take into account new capacity that is likely to come on over the next 10 years, which is the period that it is
saying may have a shortage. It also does not take into account the increased use of renewable energy. Renewable energy means that we use less gas.
We know that the market is not
predicting a shortage of gas because the gas price continues to remain low. Let
us understand this. Three weeks ago, the price of gas in the United Kingdom was
$54 per million British thermal units—MMBtu and gigajoule are almost
identical. In February in Victoria, gas reached $36 a gigajoule; it is still $6
a gigajoule in Western Australia. One of the challenges that people in the gas
industry say they have is that the cost of gas in Western Australia is so low
that it does not incentivise new gas activity.
Yes, AEMO did make that prediction,
but it made that prediction on the last two occasions on which the GSOO was handed down. I have discussed this with the
general manager of AEMO in Western Australia, Kate Ryan, and AEMO's
chief executive officer, Daniel Westerman. It was not a long conversation
because they accept that it is simply a prediction that is highly unlikely to
come forward. Just as an example, Project Haber is currently being proposed here in Western Australia. It is a major
new ammonia project that will use domestic gas. It is currently not in
production; it is a proposed multibillion-dollar investment. There is so much
gas here that Perdaman is building a new facility in the Pilbara. There is plenty
of gas and it is supporting multibillion-dollar investments in Western Australia.
It is interesting because the Australian Energy Market Operator gas statement of opportunities arose from the recommendations of
the Economics and Industry Standing Committee when Dr Mike Nahan was the
chair and I was the deputy chair. It was an important recommendation because Western
Australia has the best managed domestic gas process in Australia.
Interestingly, this is the third
occasion on which the GSOO, as it is called, has predicted that we would be
short of gas. The point is that it is saying that if there are no additional
gas discoveries or gas activity, we will fall into a negative supply, but that
has not happened on each of the last occasions on which the GSOO made that
prediction. It is a prediction of the future and that future has never
occurred. Eighty-five terajoules is not a significant amount of gas. The gas statement of opportunities does
not take into account new capacity that is likely to come on over the next 10 years, which is the period that it is
saying may have a shortage. It also does not take into account the increased use of renewable energy. Renewable energy means that we use less gas.
We know that the market is not
predicting a shortage of gas because the gas price continues to remain low. Let
us understand this. Three weeks ago, the price of gas in the United Kingdom was
$54 per million British thermal units—MMBtu and gigajoule are almost
identical. In February in Victoria, gas reached $36 a gigajoule; it is still $6
a gigajoule in Western Australia. One of the challenges that people in the gas
industry say they have is that the cost of gas in Western Australia is so low
that it does not incentivise new gas activity.
Yes, AEMO did make that prediction,
but it made that prediction on the last two occasions on which the GSOO was handed down. I have discussed this with the
general manager of AEMO in Western Australia, Kate Ryan, and AEMO's
chief executive officer, Daniel Westerman. It was not a long conversation
because they accept that it is simply a prediction that is highly unlikely to
come forward. Just as an example, Project Haber is currently being proposed here in Western Australia. It is a major
new ammonia project that will use domestic gas. It is currently not in
production; it is a proposed multibillion-dollar investment. There is so much
gas here that Perdaman is building a new facility in the Pilbara. There is plenty
of gas and it is supporting multibillion-dollar investments in Western Australia.
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