Energy is a commodity that continues to have both strategic and economic significance for Australia. Energy, and in particular, gas, will continue to be a central element in Australia’s future prosperity. The nation’s gas resources are sizeable, third only to coal and uranium. Nearly all of Australia’s conventional gas resources, however, are located in North West Australia. This demands greater focus from federal policymakers on how to continue to capitalise and secure that region’s economic benefits.
Australian sourced energy benefits from, among a range of factors, its geography, reliability and security of supply. Approximately over 90 per cent of Australia’s known conventional gas resources are centred along North West Australia in three main basins: Carnarvon, Browse and Bonaparte.
There are other gas reserves located around the nation, including parts of South West, South East and Central Australia. These additional gas resources include reserves of ‘tight gas accumulations’ in Western Australia and South Australia, as well as potential shale gas deposits in the Northern Territory.
Presently, Australia exports over three-quarters of the energy it produces. In 2008-09, energy exports accounted for 33 per cent of Australia’s total exports of goods and services. In the last five years to 2008-09, the value of Australia’s energy exports increased by 232 per cent. The ongoing rise in the value of Australia’s energy exports has continued to increase over the past twenty years at an annual rate of ten per cent.
Australia’s abundant and varied mix of energy resources has already demonstrated the importance energy will play in the nation’s future economic performance and growth prospects.
Liquefied Natural Gas (LNG) is a key component of Australia’s future energy security as well as a major export commodity for the global energy market. LNG is a clean fuel source and based on current known reserves, can provide a secure energy supply for the next half-century.
In a world where oil supplies are dwindling, LNG is described by some research and energy analysts as ‘a very long-term game’. Investment decisions to develop onshore and offshore gas fields are based, in part, on assumptions of what the price of oil will be over an extended period of time.
When one energy resource, such as oil, reaches peak production, it can have an impact on the degree to which another energy type is developed. While investment decisions are influenced by a range factors, from cost pressures, technology, skilled labour force, Native Title considerations, security and continuity of supply, the presence of ready-made energy markets makes the development of LNG fields appealing because of its inherent sustained economic benefits.
The Australian Government claims gas ‘is projected to be the fastest growing fossil fuel over the period to 2030’ and in the next ten years, the domestic LNG industry ‘has the potential to attract up to $60 billion in new project investment’.
LNG is a premier energy resource that Australia has significant reserves, located across several onshore and offshore sites across Northern Australia. There are several LNG sites in production. Other ‘mega-projects’ are either planned or under construction with many of them in North West Australia.
One such project is the Chevron-operated Gorgon Project, located on Western Australia’s North West Shelf. This is a $43 billion joint venture, between the Australian subsidiaries of Chevron (approximately 47 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas
(1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent). Other significant energy resource projects across Western Australia include those shown in Table 1.
Oil, Gas and Condensate Projects in Western Australia, as at June 2010 (Table 1)
Source: Western Australian Government Department of Mines and Petroleum and Department of State Development, June 2010
Offshore Energy and North West Australia
On 14 April 2010, the Federal Minister for Energy and Resources released seismic data and seafloor mapping titled the South West Margin Survey. The data and mapping conducted by Geoscience Australia is highly significant because it informs companies of offshore exploration opportunities, especially in frontier areas off Western Australia’s west coast.
The Minister said the South West Margin Survey data ‘will inform the acreage release process in 2010 and future years, resulting in new exploration opportunities well beyond existing horizons’. The Australian Energy Resource Assessment supports this view, stating ‘many of Australia’s known and, potentially, undiscovered oil and gas resources lie offshore within Australia’s large marine jurisdiction’. This offshore region of North West Australia contains energy resources which markets may seek well into the future.
Presently, 92 per cent of conventional gas resources produced by Australia are from the offshore industry in the Carnarvon, Browse and Bonaparte basins along North West Australia.
Offshore North West Australia Gas Province: Offshore & Marginal Basins (Figure 1)
Source: Geoscience Australia
One aspect of the report focuses on Australia’s gas reserves and production. It noted that over the last twenty years, Australia’s identified conventional gas resources have increased threefold and approximately 90 per cent of estimated recoverable reserves of conventional gas are situated on the West and North-West coasts of Australia. These regions will continue to grow in economic importance and geo-strategic significance, especially as the global appetite for energy continues.
It is, however, Western Australia, which is the nation’s largest producer of gas, accounting for 64 per cent of national production in 2008-09.
In 2009, State Government sources listed Western Australia as maintaining its number one position as the nation’s foremost exporter. That translated into 39 per cent of all Australian merchandise exports, an amount of $196 billion. In second place was Queensland followed