Transcript Slide 1

Moomba plant, Cooper Basin
Northern Regional Development
Board Energy Security Forum
Gas supply – Opportunities and Challenges
17 August 2012
Eastern Australia gas reserves and resources
Eastern Australia has a significant resource base with geographic and geological diversity.
Includes Clarence, Gloucester and Galilee
AEMO Gas Statement of Opportunities 2012 (numbers rounded down)
3 Source: ABARE Australian Gas Resource Assessment 2012; Facts Global Energy #57 2012
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2 Source:
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Why natural gas is important to Eastern Australia
Fuelling key
power generation
 Power reliability
 Clean energy
Power
generation
 Natural gas is the
only large scale
proven technology
to lower emissions
 Promoting vital jobs, a
skilled workforce,
investment and
infrastructure
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Only source of key
domestic energy
Mums & Dads
+ small
commercial
Large
Commercial
& Industrial
 Provides energy
security
 Natural gas is
fundamental for every day
cooking and heating
needs
A crucial industry
for jobs and
investment
Potential for local use of gas…
 Currently being used by some irrigators to displace diesel in
generators…
 Compressed Natural Gas (CNG) for use in farm machinery
 Local Industry (abattoirs, small scale power generation)
… Relies on enough combined demand in a region
Mark Rodgers with David Ronald on
his farm near Tamarang where an
exploration corehole was drilled in
2010.
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East Australian gas demand growth to 2020
Strong LNG demand + Australia’s transition to a low carbon economy
is driving unprecedented east coast gas demand growth.
PJ/a
 Five LNG trains
sanctioned
 Gas-fired power
generation to
substantially
increase by 2030
3,500
3,000
Proposed
2,500
2,000
Sanctioned
1,500
1,000
500
0
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
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Source: Santos
Retail and C&I
Power generation
QCLNG (T1&2)
GLNG (T1&2)
APLNG T1
APLNG T2
Shell (T1&2)
QCLNG T3
Higher demand and costs ……
Gas prices will trend towards oil-linked international
parity, circa $6–9 / GJ
Permanent
structural shift in
the East Australia
gas market
Carbon Pricing
LNG Demand
Gas-fired Power Generation Demand
Higher Development Costs
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Gas price increases are affordable
Expected higher domestic gas prices consistent with other energy
and commodity price movements over the past decade.
Commodity price indices
1,200
200
East coast gas
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Source: BMI
Iron ore
Copper
Silver
2011
2010
2009
2008
2007
2006
2005
0
2004
low compared to other
markets (UK, Europe and
Asia)
400
2003
 East coast gas prices are
600
2002
percentage of end-user
price of both gas and
electricity – circa 20%
800
2001
 Gas cost is a small
1,000
2000
domestic gas prices have
been relatively flat
Growth index (Yr 2000 = 100)
 Historically east coast
Coal
NSW & ACT materially uncontracted post 2017
NSW & ACT will be >90% uncontracted post 2017,
but starting in 2015
NSW / ACT Demand and Contracted Supply
PJ/a
250
200
150
Uncontracted
volumes
100
50
0
2011
2013
2015
Contracted Supply
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Source: Core Energy
2017
2019
2021
2023
NSW / ACT Demand
2025
NSW CSG – a world-class opportunity
Gunnedah Basin is world-class with appraisal program confirming
confidence and known resources in excess of 12,000 PJ.
Development Process to Operations
Minimum 3 years
3-4 years
2018+
Gladstone
NSW CSG industry
The resources are
available to meet the
required 2017/18
development time frame,
but we need to act
now to achieve this.
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 $1.5 billion already invested
 Over 1,000 potential new jobs
 Significant local gas production
for the first time
 A low carbon alternative to
traditional dependence on coal
Brisbane
Gunnedah
Basin
0
200
kilomet res
Sydney
Canberra
Melbourne
NSW jobs, investment and royalties
Gunnedah Basin offers NSW the possibility of significant growth between
now and 2035.
2,900+ jobs created
Investment of $16b+
Incl. 200 ongoing full
time positions and 1800
during peak construction
NSW gross state product
to increase by over $15b
Plus additional positions
within Santos
apprenticeship and
indigenous employment
programs
Employment
Investment
Royalties
Royalty payments of over $3bn
Plus corporate tax receipts of ~$6.5bn
SOURCE: The Allen Consulting Group 2011
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Regional benefits around
$450m pa
Substantial new regional
infrastructure