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An LNG Boom

 

Expert forecasts suggest LNG production will soar over that of coal and iron ore in the coming decade. On an index of 100 starting in 2010, LNG is expected to jump from 2015 onward, hitting 400 before 2018 and near 600 by 2025, while both metallurgical and thermal coal, along with iron ore, are forecast near 200-300 by that time.

 

 

Source: Bureau of Resources and Energy Economics, TD Securities


 

Eastern Australia's gas market is currently facing an unprecedented convergence of issues that have the potential to both transform it into one of the world's largest LNG exporters.

 

The facts

Supply

  • Coal seam gas deposits account for more than 80% (36,598PJ) of Eastern Australia's remaining 2p gas reserves - this rises to 119,550PJ if prospective coal seam gas reserves are included
  • AEMO forecasts 2p coal seam gas reserves in Eastern Australia to reach 114,296PJ by 2031
  • Gas production in the eastern market is expected to grow around 5% per year to 2,492PJ in 2034-35
  • By 2035, almost half (45%) of Australia's gas production is expected to come from unconventional gas
  • Australia's proven natural gas reserves are estimated to be 110tcf, the fourth largest in the world
  • Australia's technically recoverable shale gas reserves are estimated to be 396tcf.
  • By 2016 it is predicted that gas demand for LNG exports will exceed 1,000 PJ and could reach 5,000PJ, a scenario that would require the construction of 20 LNG trains
  • By 2020, Southeast Asia will have nearly 25 million tons of LNG import capacity, according to some analyst estimates - with countries including Thailand, Malaysia, Indonesia, Singapore, Philippines, and Vietnam expected to have import terminals
  • Analysts are predicting LNG export demand to effectively triple east coast gas prices from $3/GJ to as much as $9/GJ, soon after LNG exports start in 2014 and 2015
  • By 2030, domestic gas demand across Eastern Australia is predicted to be in the range of 1200PJ/year (41% increase) to 1,850PJ (62% increase)
  • Almost 40% of advanced electricity generation projects are in the gas sector and gas-powered generation is expected to grow on average 5% per year, effectively tripling installed capacity by 2020

Carbon Price

  • The carbon price came into effect on 1 July 2012
  • The Government is planning to close up to 2000mw of high emission coal-fired generation by 2020 to be replaced by gas-fired plants
  • Treasury has modelled a 200% increase in volume of gas fired electricity by 2050