Victoria needs more gas - EnergyQuest

PERTH (miningweekly.com) – New data from energy market analyst EnergyQuest has revealed that Victoria will need substantially more gas to provide long-term electricity supply.

In its latest 'EnergyQuarterly', EnergyQuest noted on Monday that the state had less than a decade to get its gas supply in order, after data revealed that the natural gas reserves of the Gippsland basin joint venture (GBJV) had fallen by nearly 20% in the last three years.

“This is a significant fall in supply from the state’s major gas producer,” EnergyQuest CEO Dr Graeme Bethune said.

The warning comes shortly after the Victorian government introduced legislation to Parliament to permanently ban hydraulic fracturing (fracking) in the state. If passed, the Bill will permanently ban all onshore unconventional gas exploration and development, including fracking and coal seam gas, and will extend the moratorium on conventional onshore gas exploration and development to June 30, 2020.

“Victoria will need substantially more gas to meet its secure electricity needs at a time coal generation in the state is being shut down amid the charge to increase renewable-energy sources to 40% of Victoria’s power generation in less than ten years,” Bethune said.

“The need in Victoria for gas to back up renewables is patently clear from recent events in South Australia. However, rather than encouraging gas exploration, the Victorian government has outlawed exploration for unconventional gas onshore and placed a moratorium on other onshore exploration to 2020.”

Bethune said the volumes from the GBJV would not last forever. “At current production rates, there are only sufficient GBJV reserves for 10.5 years and without exploration, these reserves cannot be replenished."

The new estimates are derived from BHP Billiton’s Petroleum Briefing in October, the first for three years.

The Victorian gas supply warning comes as EnergyQuest estimates that for the 2016 September quarter, South Australia, which succumbed to a crippling state-wide power blackout during the period with another major Adelaide-wide interruption just last week, reached its target of 50% of its power generation from renewable-energy sources.

The milestone was achieved nine years ahead of target.

“South Australia may have achieved its target of 50% renewable energy, but with the closure of the state’s coal-fired generation, the government was forced to beg Engie to bring the gas-fired Pelican Point generator back on line,” Bethune said.

“The government has since had to use A$24-million of tax payers’ money to encourage gas exploration, all to back up renewables, and bring back stability to the South Australian power network.”

While South Australia is scrambling to source more gas-fired generation to back up renewables, for the east coast as a whole, generation from renewables overtook gas for the first time last quarter. Wind, solar farm and rooftop photovoltaic combined to generate 4 366 GWh over the September quarter, outperforming the 3 481 GWh generated from gas. Coal-fired generation was steady at 38 988 GWh.

“Where ample coal-fired generation is available, as in New South Wales, Victoria and Queensland, renewable-energy sources are supplying power at the expense of gas,” Bethune said.

Gas-fired electricity generation in the east coast market fell by 18% quarter-on-quarter in the third quarter of 2016, which followed a 6% decline in the second quarter and a 14% decline in the first quarter of 2016.