Future of LNG industry in jeopardy

UP TO a third of Queensland's $84 billion LNG industry could be shutdown within a decade due to a gas shortage, according to a new report.

It seems the sun is setting on the LNG industry in Australia.
It seems the sun is setting on the LNG industry in Australia.

The report from independent energy consultancy EnergyQuest casts doubt on the actual size of the state's gas reserves and whether three major plants in Gladstone will ever reach full production.

EnergyQuest chief executive officer Graeme Bethune said current production levels could be "as good as it gets" after the plants operated at 82 per cent capacity in 2018.

Dr Bethune said Queensland would remain one of the world's largest LNG exporters but reserves had been over-estimated and there was not enough gas to keep six LNG trains, which liquefy and purify gas, operating in Gladstone.

"Building six LNG trains in Queensland using coal seam gas was bold and visionary but ultimately a bridge too far," Dr Bethune said.

The year-long study analysed the Queensland LNG sector's exploration, production, supply, price and market outlook.

"Unfortunately, there are serious headwinds coming and the outlook is less rosy as the industry overreached by building three projects of six trains," Dr Bethune said.

"Queensland will remain a significant LNG exporter, one of the world's largest, but with more like four trains fully utilised, reducing medium-term exports to around 17 million tonnes per annum."

He said predictions that exports would reach 25 million tonnes per annum were too optimistic and companies would have to drill an additional 18,000 wells just to keep production at current levels.

The full report is due to be released next week.