Abstract
Presented on Tuesday 17 May: Session 3 Development of coal seam gas (CSG) in Queensland (QLD) for export as liquefied natural gas (LNG) and domestic pipeline gas over the past decade has been a major Australian energy sector story. During the ramp-up period in 2015, public attention was drawn to the potential impacts of exported gas on the overall supply/demand balance and pricing outcomes for the domestic gas market. An overarching expectation of a ‘supply shortfall’ in the domestic gas market even with the growth in CSG development has taken hold as a result. This paper examines the historical record in the CSG upstream, reviewing reserves, production levels, and providing an analysis of average well flowrates. Upcoming development projects are set within this context of observed declining average well performance, and a range of ex-field breakeven gas prices to incentivise the ‘incremental CSG well’ are discussed. Maintenance of per well costs at low levels is a key factor influencing the breakeven level of ‘brownfield’ development. The analysis concludes with a reiteration of the perceived importance of CSG development for meeting expected supply shortfalls in the domestic market. Upstream risks (reserves, well performance) over the next decade are unlikely to be the major influence on CSG’s relevance to the domestic market (i.e. development is not resource-constrained). Rather, customer willingness to pay current high prices are likely to provide the key demand constraint – notwithstanding the possibility of new CSG acreage being developed at lower breakevens. To access the presentation click the link on the right. To read the full paper click here
Published Version
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