WA Domestic Gas has lost that loving feeling
No one is talking about the WA Pipeline Access Arrangements
Quietly, the Economic Regulatory Authority of WA, soon to be replaced by the Australian Energy Regulator, released the 2016 Dampier to Bunbury Natural Gas Pipeline and the Revised 2015 Goldfields Gas Pipeline Access Arrangements at the start of the month.
Now the fact these rather boring documents, of far too many pages (496 for the DBNGP), skipped much media, other than a short statement from DBP’s CEO, should be of no surprise to many outside of the gas industry. But within the energy industry we should be sitting up and noticing.
For a start, DBP’s forecast of contracted capacity was significantly down. Only 5 years ago, DBP was fully contracted, with expansion rumours around. Today contracted capacity (full haul) is sitting at just 718TJ/d, or spare capacity of 127TJ/d!
Full haul throughput for financial year 2015/16 was a rather low 615TJ/d, almost 120TJ/d below DBP’s previous Access Arrangement forecast. DBP’s demand forecast remains stagnant for the next 4 years with utilisation sitting around 85%.
Likewise, on the GGP spare capacity has crept in, well the ERA at least determined there was 7TJ/d available under the reference service (at the time of writing, GGT hasn’t made available the Capacity Register). Actual utilisation on the GGP has been largely flat over the past 5 years and is forecast to be stagnant yet again, with utilisation hovering around 75%.
If we assume the part haul and back haul demands on the DBP are for gas supply into the Pilbara and Goldfields. (This is a pretty safe bet, given between Compressor Station 2, near Onslow, and the Perth metro there is almost no off take and only a very small amount of production from Empire’s Red Gully). Then, DBP has a rather pessimistic view on gas demand in the next 5 years from the resources industry, as gas transport is flat for the 2016-2020 period. Probably not unreasonable given AEMO’s (at the time IMO’s) 2015 Gas Statement of Opportunities is also almost flat at 0.1%pa.
All of these documents indicate that despite a Domestic Gas Reservation Policy, very low domestic gas prices (spot market trades in the $3's/GJ and long term contracts rumoured to be struck in the $6-7/GJ range), further supply coming on with Gorgon yet to produce domestic gas, Wheatstone to be completed and Perth Basin expansions from AWE, Empire and the replacement Origin stakeholder, there seems to be no love for natural gas in WA at the moment.
What is going to spark some interest in natural gas? Will the low prices, especially compared to the rest of Australia, promote a renaissance in manufacturing? Will carbon policies encourage the growth of natural gas vehicles? Or will gas be pushed aside as solar, wind and other renewables continue to grow? Will we see any new gas policies in the state election?
My guess is that these new market conditions will see some innovations come for gas consumption. In the mean time, there's no shortage of gas or transport to get it where you need it.
Sources:
Dampier to Bunbury Natural Gas Pipeline 2016-2020 Access Arrangement Information
Goldfields Gas Pipeline 2015-2019 Access Arrangement information
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8yIt would be nice to think in the future there would be a move to blended bio-methane. Growing the distribution system would always keep this possibility open.
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8yNot the brightest of pictures, Michael. Have you seen any innovations which you think might drive demand? Is there a business case for more pipelines to get gas to more users?
Sustainability, Decarbonisation and Fuels at Pacific International Lines
8yLNG Bunkering looks to be becoming a reality this part of the world. It is starting with Harbour Tugs in Singapore.
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8yI've been out of the energy game for quite some time. My how things have changed. From a domestic front solar hot water, PV's, cheaper reverse cycle aircon is killing domestic demand.
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8yPerhaps we need to make greater use of ethane in naphtha intensive petrochemical markets in Asia and Europe. Low sulphur diesel still has room to grow In the road transport sector so perhaps you are right Joachim, can the marine industry adopt to gas as a fuel?