A tanker carrying LNG from Santos GLNG site with a glossary of terms about Gladstone's $70B industry.
A tanker carrying LNG from Santos GLNG site with a glossary of terms about Gladstone's $70B industry.

Why Gladstone LNG sites are centre stage in gas mess

THE spotlight is on Gladstone's three $70 billion liquefied natural gas plants as the nation looks for someone to blame for an energy crisis.

The cries for help come from three issues; increased export demand from Curtis Island plants, limits on gas exploration in southern states and an oil price that crashed faster than anyone was predicting.

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Last week the Prime Minister summoned the CEOs of all three of Curtis Island's LNG plants in a bid to find a solution to a looming gas shortage.

Already QCLNG and APLNG help the domestic market, and have committed to add more to their domestic supply.

Santos, which buys the most third party domestic gas to fill export contracts, has put the recommendation "on notice".

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Yesterday Shell announced it would drill 161 new wells in the Surat Basin as part of Project Ruby, to allow more supply to the domestic customers and natural gas exports from QCLNG.

It's believed next month the Prime Minister will hold another meeting with gas CEOs to discuss their decisions.

The three Curtis Island sites supply the domestic market with the CSG they drill mainly in the Surat and Bowen Basins and around Roma. Instead of piping them to Curtis Island to freeze for export, it would be directed back into the domestic market.

A report from the Australian Energy Market Operator found New South Wales and South Australia could face supply risks as early as summer 2018-19, Victoria in 2020-21 and Queensland between 2030-36.

It's feared a shortage in gas will lead to extreme power outages and could drive up electricity bills.

Aerial shot of the LNG proponents on Curtis Island, QGC, APLNG, GLNG.

Photo Mike Richards / The Observer
Aerial shot of the LNG proponents on Curtis Island, QGC, APLNG, GLNG. Photo Mike Richards / The Observer Mara Pattison-Sowden

Oil and gas industry body APPEA is pleading for the government not to punish Gladstone's LNG sites.

Director Rhys Turner said Queensland was contributing gas to the domestic market.

For example, Shell has stated that its QGC business will sell over 75 petajoules (PJs), net of domestic gas purchases, into the domestic market this year, which represents more than 10% of east coast demand and 40% of Queensland's demand.

"The idea that if the Queensland LNG export industry did not exist that there would be enough gas to go around is incorrect. Without the export industry, this gas would have simply remained in the ground," Mr Turner said.

"The sad reality is that - despite many years of warnings - politicians in New South Wales and Victoria have failed to act to secure their own future gas supply by enabling the development of projects in their own states."

Victoria and New South Wales premiers have been encouraged to lift their gas drilling bans.



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