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Victoria warned of critical gas famine

Victoria warned of critical gas famine

Reported by the Petroleum Exploration Society of Australia (PESA) 05/12/16

Victoria has been warned it will need substantially more gas to provide a secure long-term electricity supply for the State, as new evidence emerges of growing concerns around its current main source of gas.

The warning says the State has less than a 10-year window to get its gas supply books in order – a scenario substantially worsened by the recent decision limiting new onshore gas exploration.

In its just released EnergyQuarterly report, independent energy consultancy, EnergyQuest, says new data reveals that the natural gas reserves of the Gippsland Basin Joint Venture (GBJV) have fallen by nearly 20% in the past three years.

The figure is a warning shot EnergyQuest says, as the GBJV in just the last quarter, supplied nearly 80% of Victoria’s total gas production.

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

“Victoria will need substantially more gas to meets 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 10 years,” Dr 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.”

Dr 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,” he said.

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

Ironically, the Victorian gas supply warning comes as EnergyQuest estimates that for the 2016 September quarter, South Australia – which succumbed to a crippling Statewide 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,” Dr Bethune said.

“The Government has since had to use $24m of tax payers’ money to encourage gas exploration, all to back-up renewables, and bring back stability to the SA power network.”

While South Australia was 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 PV 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 NSW, Victoria and Queensland, renewable energy sources are supplying power at the expense of gas,” Dr Bethune said.

“Gas-fired electricity generation in the east coast market fell by 18% quarter on quarter (qoq) in Q3 2016, which followed a 6% decline in Q2 and a 14% qoq decline in Q1 2016.

“Gas-fired generation as a percentage of all National Electricity Market (NEM) scheduled generation fell from 8.3% in Q3 2015 to 6.8% in the Q3 2016.

“However, once coal goes, gas is an essential part of the energy mix. The only increase in gas generation for the period was in SA due to that State’s closure of the coal fired Northern power station at Port Augusta.”

Read full report here at PESA (image courtesy of EnergyQuest)

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